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Scale, Scope and Cognition: Context Analysis of Multiple Stated Choice Experiments on the Values of Life and Limb

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  • Marija Bockarjova

    ()
    (VU University Amsterdam)

  • Piet Rietveld

    ()
    (VU University Amsterdam)

  • Erik T. Verhoef

    ()
    (VU University Amsterdam)

Abstract

In this paper we use data from an SP study on flood safety in the Netherlands, and elicit individual preferences for reduction of risk to life and limb. We perform context analysis to test the robustness of fatality risk valuation throughout choice experiments. The main interest of this paper is VOSL sensitivity to the valuation of correlated risks (scope effect). Besides, we explore the role of cognition on the stability of valuation across choice experiments using age and education. We pool data from multiple choice experiments and apply nested and mixed logit models in our analysis. We confirm statistically significant sensitivity to scope, comparing VOSL estimates for the test group in a choice experiment where correlated risks were present (risks of fatality, injury and evacuation) to an experiment where only fatality risk is valued. We find that the origin of differences in VOSL valuations across the choice experiments lies in differences in age and educational attainment, and may therefore be related to cognitive abilities of respondents. In particular, we conclude that higher VOSL sensitivity to scope is most prominently present among respondents of senior age (65 and older) and respondents without college education. This finding has important implications for discrete choice modeling and the use of obtained values in cost-benefit analyses.

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Bibliographic Info

Paper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 12-046/3.

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Date of creation: 26 Apr 2012
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Handle: RePEc:dgr:uvatin:20120046

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Web page: http://www.tinbergen.nl

Related research

Keywords: stated preferences; value of statistical life; value of statistical injury; value of statistical evacuation; flood risk;

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References

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  3. Bellavance, Franois & Dionne, Georges & Lebeau, Martin, 2009. "The value of a statistical life: A meta-analysis with a mixed effects regression model," Journal of Health Economics, Elsevier, vol. 28(2), pages 444-464, March.
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  12. Burge, Peter & Netten, Ann & Gallo, Federico, 2010. "Estimating the value of social care," Journal of Health Economics, Elsevier, vol. 29(6), pages 883-894, December.
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  14. F. Johnson, 2006. "Comment on “Revealing Differences in Willingness to Pay Due to the Dimensionality of Stated Choice Designs: An Initial Assessment”," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 34(1), pages 45-50, 05.
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  16. Marija Bockarjova & Piet Rietveld & Erik T. Verhoef, 2012. "Composite Valuation of Immaterial Damage in Flooding: Value of Statistical Life, Value of Statistical Evacuation and Value of Statistical Injury," Tinbergen Institute Discussion Papers 12-047/3, Tinbergen Institute.
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