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A risk benefit calculation method based on consumer behavior and household risk production function

Author

Listed:
  • Tadahiro Okuyama

    () (University of Nagasaki)

Abstract

Stated preference methods (SPMs) require researchers to use questionnaires to elicit from respondents their monetary values for benefits from a hypothetical risk reduction by the implementation of a particular project. The complexity of questionnaires makes it more difficult for respondents to choose the benefit values and complicates executing the risk reduction benefit surveys in the short term for policy-makers. The purpose of this study is to propose a risk reduction benefit evaluation model that incorporates individual behavior and subjective risks. The household production function approach is employed to express the individual's expected utility function. The results indicate that the SPM benefit values might be underestimated by the marginal change in the subjective risk. The method presented in this study is flexible and can be applied to measuring various patterns of risk reduction benefits using the economic market behavior data.

Suggested Citation

  • Tadahiro Okuyama, 2017. "A risk benefit calculation method based on consumer behavior and household risk production function," Economics Bulletin, AccessEcon, vol. 37(2), pages 645-652.
  • Handle: RePEc:ebl:ecbull:eb-17-00003
    as

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    References listed on IDEAS

    as
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    More about this item

    Keywords

    risk reduction benefit; consumer behavior; household production function; subjective risk;

    JEL classification:

    • D6 - Microeconomics - - Welfare Economics
    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics

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