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An Investigation of the Rationality of Consumer Valuations of Multiple Health Risks

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Author Info
W. Kip Viscusi
Wesley A. Magat
Joel Huber

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Abstract

After developing a conceptual analysis of consumer valuation of multiple risks, we explore both economic and cognitive hypotheses regarding individual risk-taking. Using a sample of over 1,500 consumers, our study ascertains risk-dollar tradeoffs for the risks associated with using an insecticide and a toilet bowl cleaner. We observe the expected positive valuation of risk reductions and find empirical support for a diminishing in the valuation of risk reduction as the extent of the risk reduction increases. We also find evidence of certainty premiums for the total elimination of one risk, but no strong evidence of additional certainty premiums for the elimination of multiple risks. Strong reference risk effects are evident, as increases in risk were valued much more greatly than were decreases.

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File URL: http://links.jstor.org/sici?sici=0741-6261%28198724%2918%3A4%3C465%3AAIOTRO%3E2.0.CO%3B2-J&origin=repec
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Publisher Info
Article provided by The RAND Corporation in its journal RAND Journal of Economics.

Volume (Year): 18 (1987)
Issue (Month): 4 (Winter)
Pages: 465-479
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Handle: RePEc:rje:randje:v:18:y:1987:i:winter:p:465-479

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  10. Andrew J Lloyd, 2003. "Threats to the estimation of benefit: are preference elicitation methods accurate?," Health Economics, John Wiley & Sons, Ltd., vol. 12(5), pages 393-402. [Downloadable!]
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  13. Rousu, Matthew & Huffman, Wallace E. & Shogren, Jason F. & Tegene, Abebayehu, 2002. "Are Us Consumers Tolerant Of Gm Foods?," 2002 Annual meeting, July 28-31, Long Beach, CA 19889, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association). [Downloadable!]
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  14. Jin-Tan Liu & James K. Hammitt & Jung-Der Wang & Jin-Long Liu, 2000. "Mother's willingness to pay for her own and her child's health: a contingent valuation study in Taiwan," Health Economics, John Wiley & Sons, Ltd., vol. 9(4), pages 319-326.
  15. Jérôme Adda, 2007. "Behavior towards health risks: An empirical study using the “Mad Cow” crisis as an experiment," Journal of Risk and Uncertainty, Springer, vol. 35(3), pages 285-305, December. [Downloadable!] (restricted)
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