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Methodology

Expected Job Value Calculator methodology

Compare two job choices while keeping a bounded two-state uncertainty model explicit.
Duc Nguyen X.By Duc Nguyen X.· Founder, Wage101Last reviewed: View update historyMethodology

Educational only: Work and pay decision support, not tax, legal, financial or career advice.

Privacy: Calculations run locally; Wage101 does not receive your work or pay inputs.

Update policy: Reviewed when formulas or official dependencies change.

Scope: Market-neutral work and pay planning using your own assumptions.

1. Formulas and units

Expected-value spread
expectedValueSpread = optionAExpectedValue − optionBExpectedValue

Where

expectedValueSpread
Option A expected-value advantage (currency units over the horizon)Source: Calculated output
optionAExpectedValue
Option A expected value (currency units over the horizon)Source: Calculated output
optionBExpectedValue
Option B expected value (currency units over the horizon)Source: Calculated output
Option A expected value
optionAExpectedValue = optionAState1Probability × optionAState1Value + optionAState2Probability × optionAState2Value

Where

optionAState1Probability
Option A likely-state probability (decimal)Source: User assumption
optionAState1Value
Option A state 1 horizon value (currency units)Source: User assumption
optionAState2Probability
Option A other-state probability (decimal)Source: User assumption
optionAState2Value
Option A state 2 horizon value (currency units)Source: User assumption
optionAExpectedValue
Option A expected value (currency units over the horizon)Source: Calculated output
Option B expected value
optionBExpectedValue = optionBState1Probability × optionBState1Value + optionBState2Probability × optionBState2Value

Where

optionBState1Probability
Option B likely-state probability (decimal)Source: User assumption
optionBState1Value
Option B state 1 horizon value (currency units)Source: User assumption
optionBState2Probability
Option B other-state probability (decimal)Source: User assumption
optionBState2Value
Option B state 2 horizon value (currency units)Source: User assumption
optionBExpectedValue
Option B expected value (currency units over the horizon)Source: Calculated output
Option A lower value
optionAMinimumValue = min(optionAState1Value, optionAState2Value)

Where

optionAState1Value
Option A state 1 horizon value (currency units)Source: User assumption
optionAState2Value
Option A state 2 horizon value (currency units)Source: User assumption
optionAMinimumValue
Option A lower entered value (currency units over the horizon)Source: Calculated output
Option B lower value
optionBMinimumValue = min(optionBState1Value, optionBState2Value)

Where

optionBState1Value
Option B state 1 horizon value (currency units)Source: User assumption
optionBState2Value
Option B state 2 horizon value (currency units)Source: User assumption
optionBMinimumValue
Option B lower entered value (currency units over the horizon)Source: Calculated output

Money inputs and outputs use the currency selected in the scenario without changing the canonical methodology. Pay, time, benefits and work-related costs use the units stated beside each input.

2. Worked example

Input assumptions

Compare option A at 80% of 100,000 and 20% of 30,000 with option B at 95% of 85,000 and 5% of 30,000.

Calculation and outputs

Example

Compare option A at 80% of 100,000 and 20% of 30,000 with option B at 95% of 85,000 and 5% of 30,000.

Option A expected-value advantage
3,750.00 currency units
Option A expected value
86,000.00 currency units
Option B expected value
82,250.00 currency units
Option A lower entered value
30,000.00 currency units
Option B lower entered value
30,000.00 currency units

Expected values and lower entered outcomes remain visible beside the spread.

Interpretation

Use expected value beside the lower entered outcomes, not as a guaranteed choice.

3. Validation and boundary checks

  • Exactly two options and two states per option are used.
  • Each state probability stays between 0 and 1.
  • The second probability is normalized so each option sums to 1.

4. Assumptions and source classification

  • Horizon values use the same basis for both options.
  • States are mutually exclusive and collectively exhaustive.
  • Probabilities and values are user judgments.

This calculator has no current policy-data dependency. Its work and pay assumptions are user supplied. Registered family-level regression suites exercise the shared work-logic engine and worked-result reconciliation.

5. Limitations

  • Two states cannot capture every outcome.
  • Expected value does not describe risk tolerance or guarantee an outcome.
  • No tax, job-market probability or local policy is inferred.

This is educational decision support, not personalised tax, legal, financial or career advice. Check the treatment of your circumstances under the rules that apply to you and seek qualified advice where appropriate.

6. Update and evidence policy

Registered family-level suites test formula invariants and example reconciliation; the release ledger records that coverage without claiming a separate oracle for every line of public copy. There is no official threshold or benchmark to refresh for this calculator. Work and pay inputs remain user-supplied because they vary by person, job and contract.

Change history

  1. : Initial public release of the Expected Job Value planner and methodology.

Related reading

Use these practical guides to interpret the decision and its assumptions.

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