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The Value of Safety as Revealed in the Swedish Car Market: An Application of the Hedonic Pricing Approach

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  • Henrik Andersson

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Abstract

In this article the hedonic regression technique is used to estimate the value of traffic safety, using information from the Swedish market for automobiles. The results from the study show that the market price of an automobile is negatively correlated with its inherent risk level, i.e. Swedish car consumers pay a safety premium for safer cars. In comparison to previous Swedish stated-preference studies, this study reveals a lower willingness to pay for additional car safety, which might be a result of the interaction between government interventions and individual self-insurance and self-protection. Copyright Springer Science + Business Media, Inc. 2005

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File URL: http://hdl.handle.net/10.1007/s11166-005-1154-1
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Bibliographic Info

Article provided by Springer in its journal Journal of Risk and Uncertainty.

Volume (Year): 30 (2005)
Issue (Month): 3 (May)
Pages: 211-239

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Handle: RePEc:kap:jrisku:v:30:y:2005:i:3:p:211-239

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Web page: http://www.springerlink.com/link.asp?id=100299

Related research

Keywords: car safety; value of characteristics; revealed preferences; willingness to pay;

References

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  1. Glenn W. Harrison & Morten I. Lau & Melonie B. Williams, 2002. "Estimating Individual Discount Rates in Denmark: A Field Experiment," American Economic Review, American Economic Association, vol. 92(5), pages 1606-1617, December.
  2. Dreyfus, Mark K & Viscusi, W Kip, 1995. "Rates of Time Preference and Consumer Valuations of Automobile Safety and Fuel Efficiency," Journal of Law and Economics, University of Chicago Press, vol. 38(1), pages 79-105, April.
  3. Peltzman, Sam, 1975. "The Effects of Automobile Safety Regulation," Journal of Political Economy, University of Chicago Press, vol. 83(4), pages 677-725, August.
  4. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132.
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  7. Melville L. McMillan & Bradford G. Reid & David W. Gillen, 1980. "An Extension of the Hedonic Approach for Estimating the Value of Quiet," Land Economics, University of Wisconsin Press, vol. 56(3), pages 315-328.
  8. Gerdtham, Ulf-G & Johannesson, Magnus, 2002. " Do Life-Saving Regulations Save Lives?," Journal of Risk and Uncertainty, Springer, vol. 24(3), pages 231-49, May.
  9. Viscusi, W Kip & Aldy, Joseph E, 2003. " The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World," Journal of Risk and Uncertainty, Springer, vol. 27(1), pages 5-76, August.
  10. Persson, Ulf, et al, 2001. " The Value of a Statistical Life in Transport: Findings from a New Contingent Valuation Study in Sweden," Journal of Risk and Uncertainty, Springer, vol. 23(2), pages 121-34, September.
  11. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  12. Lindgren, Bjorn & Stuart, Charles, 1980. "The Effects of Traffic Safety Regulation in Sweden," Journal of Political Economy, University of Chicago Press, vol. 88(2), pages 412-27, April.
  13. Moore, Michael J & Viscusi, W Kip, 1988. "The Quantity-Adjusted Value of Life," Economic Inquiry, Western Economic Association International, vol. 26(3), pages 369-88, July.
  14. Cropper, Maureen L & Aydede, Sema K & Portney, Paul R, 1992. "Rates of Time Preference for Saving Lives," American Economic Review, American Economic Association, vol. 82(2), pages 469-72, May.
  15. Johannesson, Magnus & Johansson, Per-Olov & O'Conor, Richard M., 1996. "The Value of Private Safety versus the Value of Public Safety," Working Paper Series in Economics and Finance 103, Stockholm School of Economics.
  16. Cropper, Maureen L & Deck, Leland B & McConnell, Kenneth E, 1988. "On the Choice of Functional Form for Hedonic Price Functions," The Review of Economics and Statistics, MIT Press, vol. 70(4), pages 668-75, November.
  17. Glenn C. Blomquist, 2004. "Self-Protection and Averting Behavior, Values of Statistical Lives, and Benefit Cost Analysis of Environmental Policy," Review of Economics of the Household, Springer, vol. 2(1), pages 89-110, 03.
  18. repec:reg:rpubli:282 is not listed on IDEAS
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