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

Willingness to Pay for Car Safety: Evidence from Sweden

Contents:

Author Info

Abstract

This study estimates a marginal willingness to pay (WTP) function for a road-mortality risk reduction. Observed marginal WTP from the Swedish car market is used and found to be positively correlated with the baseline risk of the cars. Among owner attributes, we find that income increases marginal WTP, whereas background risk reduces marginal WTP. Also, when comparing the estimated monetary value of a non-marginal risk reduction derived from the integral of the marginal WTP-function with an estimate based on marginal WTP, we find that the estimates are different and that the difference is 15-25 percent for larger estimates, but negligible for smaller risk reductions (which is in line with expectations).

Download Info

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Bibliographic Info

Paper provided by Swedish National Road & Transport Research Institute (VTI) in its series Working Papers with number 2006:7.

as in new window
Length: 22 pages
Date of creation: 20 Sep 2006
Date of revision:
Publication status: Published in Environmental and Resource Economics, 2008, pages 579-594.
Handle: RePEc:hhs:vtiwps:2006_007

Contact details of provider:
Postal: VTI, Transport Economics, P.O. Box 6056, SE-171 06 Solna, Sweden
Phone: +46-13-20 40 00
Fax: +46-13-14 14 36
Email:
Web page: http://www.vti.se/tek
More information through EDIRC

Related research

Keywords: car safety; hedonic prices; non-marginal willingness to pay; background risk;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

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. 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, Springer, vol. 27(1), pages 5-76, August.
  2. Johansson-Stenman, Olof & Martinsson, Peter, 2006. "Honestly, why are you driving a BMW?," Journal of Economic Behavior & Organization, Elsevier, Elsevier, vol. 60(2), pages 129-146, June.
  3. Henrik Andersson, 2005. "The Value of Safety as Revealed in the Swedish Car Market: An Application of the Hedonic Pricing Approach," Journal of Risk and Uncertainty, Springer, Springer, vol. 30(3), pages 211-239, May.
  4. Ohsfeldt, Robert L & Smith, Barton A, 1985. "Estimating the Demand for Heterogeneous Goods," The Review of Economics and Statistics, MIT Press, vol. 67(1), pages 165-71, February.
  5. Bartik, Timothy J, 1987. "The Estimation of Demand Parameters in Hedonic Price Models," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 95(1), pages 81-88, February.
  6. Olivier Armantier & Nicolas Treich, 2004. "Social Willingness to Pay, Mortality Risks and Contingent Valuation," Journal of Risk and Uncertainty, Springer, Springer, vol. 29(1), pages 7-19, 07.
  7. Tzipi Eshet & Mira Baron & Mordechai Shechter, 2007. "Exploring Benefit Transfer: Disamenities of Waste Transfer Stations," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 37(3), pages 521-547, July.
  8. James N. Brown & Harvey S. Rosen, 1982. "On the Estimation of Structural Hedonic Price Models," NBER Technical Working Papers 0018, National Bureau of Economic Research, Inc.
  9. repec:reg:rpubli:282 is not listed on IDEAS
  10. Kevin J. Boyle & P. Joan Poor & Laura O. Taylor, 1999. "Estimating the Demand for Protecting Freshwater Lakes from Eutrophication," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 81(5), pages 1118-1122.
  11. Helen Tauchen & Ann Dryden Witte, 2001. "Estimating Hedonic Models: Implications of the Theory," NBER Technical Working Papers 0271, National Bureau of Economic Research, Inc.
  12. Epple, Dennis, 1987. "Hedonic Prices and Implicit Markets: Estimating Demand and Supply Functions for Differentiated Products," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 95(1), pages 59-80, February.
  13. Weinstein, Milton C & Shepard, Donald S & Pliskin, Joseph S, 1980. "The Economic Value of Changing Mortality Probabilities: A Decision-Theoretic Approach," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 94(2), pages 373-96, March.
  14. 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, University of Chicago Press, vol. 38(1), pages 79-105, April.
  15. Ivar Ekeland & James Heckman & Lars Nesheim, 2002. "Identifying hedonic models," CeMMAP working papers, Centre for Microdata Methods and Practice, Institute for Fiscal Studies CWP06/02, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  16. Sherwin Rosen, . "The Value of Changes in Life Expectancy," University of Chicago - Population Research Center, Chicago - Population Research Center 87-14, Chicago - Population Research Center.
  17. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  18. Andersson, Henrik & Treich, Nicolas, 2008. "The Value of a Statistical Life," Working Papers, Swedish National Road & Transport Research Institute (VTI) 2008:1, Swedish National Road & Transport Research Institute (VTI).
  19. Alberini, Anna & Cropper, Maureen & Krupnick, Alan & Simon, N.B.Nathalie B., 2004. "Does the value of a statistical life vary with age and health status? Evidence from the US and Canada," Journal of Environmental Economics and Management, Elsevier, vol. 48(1), pages 769-792, July.
  20. Anna Alberini & Alistair Hunt & Anil Markandya, 2004. "Willingness to Pay to Reduce Mortality Risks: Evidence from a Three-Country Contingent Valuation Study," Working Papers, Fondazione Eni Enrico Mattei 2004.111, Fondazione Eni Enrico Mattei.
  21. Ekeland, Ivar & Heckman, James J. & Nesheim, Lars, 2003. "Identification and Estimation of Hedonic Models," IZA Discussion Papers 853, Institute for the Study of Labor (IZA).
  22. 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, Springer, vol. 23(2), pages 121-34, September.
  23. 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.
  24. Sloan, Frank A. & Kip Viscusi, W. & Chesson, Harrell W. & Conover, Christopher J. & Whetten-Goldstein, Kathryn, 1998. "Alternative approaches to valuing intangible health losses: the evidence for multiple sclerosis1," Journal of Health Economics, Elsevier, Elsevier, vol. 17(4), pages 475-497, August.
  25. Han Bleichrodt & Louis Eeckhoudt, 2006. "Willingness to pay for reductions in health risks when probabilities are distorted," Health Economics, John Wiley & Sons, Ltd., vol. 15(2), pages 211-214.
  26. 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.
  27. Kahn, Shulamit & Lang, Kevin, 1988. "Efficient Estimation of Structural Hedonic Systems," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 29(1), pages 157-66, February.
  28. Brookshire, David S, et al, 1985. "A Test of the Expected Utility Model: Evidence from Earthquake Risks," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 93(2), pages 369-89, April.
  29. Alison P. Hagy, 1998. "The Demand for Child Care Quality: An Hedonic Price Theory Approach," Journal of Human Resources, University of Wisconsin Press, vol. 33(3), pages 683-710.
  30. Drazen Prelec, 1998. "The Probability Weighting Function," Econometrica, Econometric Society, Econometric Society, vol. 66(3), pages 497-528, May.
  31. Heckman, James J. & Matzkin, Rosa & Nesheim, Lars, 2003. "Simulation and Estimation of Hedonic Models," IZA Discussion Papers 843, Institute for the Study of Labor (IZA).
  32. Diamond, Douglas Jr. & Smith, Barton A., 1985. "Simultaneity in the market for housing characteristics," Journal of Urban Economics, Elsevier, vol. 17(3), pages 280-292, May.
  33. Joseph E. Aldy & W. Kip Viscusi, 2007. "Age Differences in the Value of Statistical Life: Revealed Preference Evidence," Review of Environmental Economics and Policy, Association of Environmental and Resource Economists, vol. 1(2), pages 241-260, Summer.
  34. Freeman, A Myrick, III, 1974. "Air Pollution and Property Values: A Further Comment," The Review of Economics and Statistics, MIT Press, vol. 56(4), pages 554-56, November.
  35. Ted Gayer & James T. Hamilton & W. Kip Viscusi, 2000. "Private Values Of Risk Tradeoffs At Superfund Sites: Housing Market Evidence On Learning About Risk," The Review of Economics and Statistics, MIT Press, vol. 82(3), pages 439-451, August.
  36. Eeckhoudt, Louis R. & Hammitt, James K., 2004. "Does risk aversion increase the value of mortality risk?," Journal of Environmental Economics and Management, Elsevier, vol. 47(1), pages 13-29, January.
  37. Atkinson, Scott E & Halvorsen, Robert, 1990. "The Valuation of Risks to Life: Evidence from the Market for Automobiles," The Review of Economics and Statistics, MIT Press, vol. 72(1), pages 133-36, February.
  38. Janusz R. Mrozek & Laura O. Taylor, 2002. "What determines the value of life? a meta-analysis," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 21(2), pages 253-270.
  39. 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.
  40. repec:reg:wpaper:282 is not listed on IDEAS
  41. Viscusi, W Kip & Evans, William N, 1990. "Utility Functions That Depend on Health Status: Estimates and Economic Implications," American Economic Review, American Economic Association, American Economic Association, vol. 80(3), pages 353-74, June.
  42. Mats Wilhelmsson, 2000. "The Impact of Traffic Noise on the Values of Single-family Houses," Journal of Environmental Planning and Management, Taylor & Francis Journals, Taylor & Francis Journals, vol. 43(6), pages 799-815.
  43. Jones-Lee, Michael W, 1974. "The Value of Changes in the Probability of Death or Injury," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 82(4), pages 835-49, July/Aug..
  44. Bartik, Timothy J, 1987. "Estimating Hedonic Demand Parameters with Single Market Data: The Problems Caused by Unobserved Tastes," The Review of Economics and Statistics, MIT Press, vol. 69(1), pages 178-80, February.
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. Mouloud Haddak & Nathalie Havet & Marie Lefèvre, 2014. "Willingness-to-pay for road safety improvement," Working Papers, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure 1406, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure.
  2. Henrik Andersson & Lina Jonsson & Mikael Ögren, 2010. "Property Prices and Exposure to Multiple Noise Sources: Hedonic Regression with Road and Railway Noise," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 45(1), pages 73-89, January.
  3. Andersson, Henrik & Hammitt, James & Lindberg, Gunnar & Sundström, Kristian, 2011. "Willingness to Pay and Sensitivity to Time Framing: A Theoretical Analysis and an Application on Car Safety," LERNA Working Papers, LERNA, University of Toulouse 11.20.354, LERNA, University of Toulouse.

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:hhs:vtiwps:2006_007. 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: (Mats Berggren).

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.