Advanced Search
MyIDEAS: Login to save this paper or follow this series

Is There a "Dead-Anyway" Effect in Willingness to Pay for Risk Reduction?

Contents:

Author Info

  • Friedrich Breyer
  • Markus M. Grabka

Abstract

In einem neueren Beitrag diskutieren Pratt and Zeckhauser (JPE, 1996), welches Maß der marginalen Zahlungsbereitschaft (WTP) von Individuen für die Reduktion ihrer Sterbewahrscheinlichkeit bei öffentlichen Entscheidungen über gefahrenerhebliche Projekte verwendet werden sollte. Sie schlagen vor, die gemessene WTP um den so genannten "Dead-anyway"-Effekt zu berichtigen, der besagt, dass die WTP mit dem Ausgangswert des Risikos zunimmt, dem das befragte Individuum ausgesetzt ist. Dieser Effekt beruht allerdings auf der Abwesenheit vollkommener Märkte für bedingte Güter. Wir diskutieren zunächst die theoretischen Grundlagen des "Dead-anyway"-Effekts und schlagen dann einen neuen empirischen Test mittels der Beziehung zwischen Vermögen, Sterberisiko und Lebenszufriedenheit vor. Eine Anwendung des Tests an Hand zweier Sätze von Umfragedaten aus Deutschland und Australien ergibt keine Bestätigung für den von Pratt und Zeckhauser behaupteten Effekt. In a recent paper, Pratt and Zeckhauser (JPE, 1996) discuss the measure of individuals' willingness to pay (WTP) for the reduction of risks to their lives which should be used for public decisions on risk-reducing projects. They suggest to correct observed WTP for the "dead-anyway" effect, which says that WTP increases with the level of risk to which the individual is exposed - an effect which is due to the imperfection of contingent-claims markets. We first discuss the theoretical foundations of the asserted effect and then propose a new empirical test based on the relationship between wealth, life satisfaction and exposure to risk of dying. Application of the test using two sets of survey data from Germany and Australia.yields no support for the asserted dead-anyway effect.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.diw.de/documents/publikationen/73/diw_01.c.38528.de/dp252.pdf
Download Restriction: no

Bibliographic Info

Paper provided by DIW Berlin, German Institute for Economic Research in its series Discussion Papers of DIW Berlin with number 252.

as in new window
Length: 16 p.
Date of creation: 2001
Date of revision:
Handle: RePEc:diw:diwwpp:dp252

Contact details of provider:
Postal: Mohrenstraße 58, D-10117 Berlin
Phone: xx49-30-89789-0
Fax: xx49-30-89789-200
Email:
Web page: http://www.diw.de/en
More information through EDIRC

Related research

Keywords: value of statistical life; mortality risk; contingent-claims markets;

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Pratt, John W & Zeckhauser, Richard J, 1996. "Willingness to Pay and the Distribution of Risk and Wealth," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 104(4), pages 747-63, August.
  2. Winkelmann, Liliana & Winkelmann, Rainer, 1998. "Why Are the Unemployed So Unhappy? Evidence from Panel Data," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 65(257), pages 1-15, February.
  3. Hammitt, James K & Graham, John D, 1999. "Willingness to Pay for Health Protection: Inadequate Sensitivity to Probability?," Journal of Risk and Uncertainty, Springer, Springer, vol. 18(1), pages 33-62, April.
  4. Smith, V Kerry & Desvousges, William H, 1987. "An Empirical Analysis of the Economic Value of Risk Changes," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 95(1), pages 89-114, February.
  5. Eeckhoudt, Louis R & Hammitt, James K, 2001. " Background Risks and the Value of a Statistical Life," Journal of Risk and Uncertainty, Springer, Springer, vol. 23(3), pages 261-79, November.
  6. Joni Hersch & W. Kip Viscusi, 1990. "Cigarette Smoking, Seatbelt Use, and Differences in Wage-Risk Tradeoffs," Journal of Human Resources, University of Wisconsin Press, vol. 25(2), pages 202-227.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Friedrich Breyer & Stefan Felder, 2002. "The Dead-Anyway Effect Revis(it)ed," Discussion Papers of DIW Berlin 302, DIW Berlin, German Institute for Economic Research.
  2. Strand, Jon, 2006. "Valuation of environmental improvements in continuous time with mortality and morbidity effects," Resource and Energy Economics, Elsevier, Elsevier, vol. 28(3), pages 229-241, August.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:diw:diwwpp:dp252. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bibliothek).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.