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Economic Valuation of Mortality Risk Reduction - Volumes 1 and 2 (2004)

Paper Number: EE-0488

Document Date: 11/01/2004

Author(s):  Schulze, William; Chestnut, Lauraine G.; Rowe, Robert D.; Lazo, Jeffrey K.; Breffle, William S.

Subject Area(s): Benefits Analysis, Valuation, Mortality Risks, Stated Preference Methods

Keywords:  Value of Statistical Life, Benefits Analysis, Valuation, Mortality Risk Reduction, Stated Preference Methods

Abstract: 

Volume 1.  A Stated Preference Approach

This study uses stated preference questions to evaluate preferences and values for risk reductions. Stated preference (SP) approaches use survey questions to have respondents explicitly or implicitly state their preferences and values (as opposed to a revealed preference approach based on interpreting observed behavior). The SP approach is used to provide comprehensive preference and valuation information on a wide range of situations (e.g., different fatal risk causes, different risk levels, different timing of risks) that are not available with observed behavior. Considerable variation is shown in the implied value of statistical life (VSL) depending on the risk level, type of risk (cancer, heart attack, or motor vehicle accident), and timing of risk.

Volume 2. Effects of Age and Family Status on the Value of Statistical Life–Evidence from the Automobile Market and a National Survey of Automobile Use

This study reports on a new national survey of individual automobile usage designed to provide information on automobile safety expenditures by family status and age. Noting that, for a family, the safety of an automobile is a public good, these data, when combined with an analysis of the FARS data set on fatal automobile accidents and a hedonic price function for automobiles, allows estimation of the value of statistical life for individual family members over their lifetime. The research also attempts to resolve the problem of an anomalous sign on the coefficient on fuel consumption in prior hedonic price studies of automobile safety. The principal result is that the value of statistical life remains relatively constant over the lifetime for all family members with the exception of parents with children living in the household, who have a lower value. Adults without children do not show a similar decrease in the value of statistical life. Estimates of income elasticity are also presented and a theoretical explanation for the results is provided.

This paper is part of the  Environmental Economics Research Inventory.

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