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Willingness to Pay for Car Safety: Evidence from Sweden

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Author Info
Andersson, Henrik () (VTI)

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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).

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

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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
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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:
C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy

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References listed on IDEAS
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