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Exploring heterogeneity in the value of a statistical life: Cause of death v. risk perceptions

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  • Alberini, Anna
  • Ščasný, Milan

Abstract

Most current environmental policy analyses use Value of a Statistical Life (VSL) figures inferred from workplace safety and traffic accident contexts to compute the benefits of environmental programs that avoid premature deaths. There is considerable debate about the appropriateness of this practice, in part because the effect of cause of death may be partly confounded with latency, initial risks, and competing risks. Preference for reducing risks can be also affected by individual-assessed risk attributes that are rarely controlled in valuation studies. This paper explores reasons for differences in preferences for mortality risk reductions (if any), and establishes the magnitude of the effects of such risk attributes as compared to other sources of VSL heterogeneity. In our conjoint choice experiments, cause of death, the size of the risk reduction, and latency, the “price” of the risk reduction and the mode of delivery of the risk reduction are explicit attributes of the alternatives to be examined by the respondent. Our statistical models also control for actual and perceived exposure to risks, initial risks, risk attributes such as dread, and sensitivity to and controllability of specific risks. We find that there is significant heterogeneity in the valuation of mortality risks and thus in the VSL. The VSL increases with dread, exposure to risk, and the respondents' assessments of the baseline risks. It is higher when the risk reduction is delivered by a public program, and increases with the effectiveness rating assigned by the respondent to the mode of the risk reduction. Even when we control explicitly for all of these factors, the cause of death per se accounts for a large portion of the VSL. All else the same, the fact that the cause of the death is “cancer” results in a VSL that is about one million euro above the amount predicted by dread, exposure and other risk perception variables. The VSL in the road safety context is about one million euro less than what is predicted by dread, exposure, or beliefs compared to VSL for the respiratory risk context. The effect of cause of death is thus as large as the effect of other sources of VSL heterogeneity. Our respondents do not seem to discount future risks.

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  • Alberini, Anna & Ščasný, Milan, 2013. "Exploring heterogeneity in the value of a statistical life: Cause of death v. risk perceptions," Ecological Economics, Elsevier, vol. 94(C), pages 143-155.
  • Handle: RePEc:eee:ecolec:v:94:y:2013:i:c:p:143-155
    DOI: 10.1016/j.ecolecon.2013.07.012
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    Cited by:

    1. Rebecca L. McDonald & Susan M. Chilton & Michael W. Jones-Lee & Hugh R. T. Metcalf, 2016. "Dread and latency impacts on a VSL for cancer risk reductions," Journal of Risk and Uncertainty, Springer, vol. 52(2), pages 137-161, April.
    2. repec:eee:jhecon:v:57:y:2018:i:c:p:249-262 is not listed on IDEAS
    3. repec:kap:jrisku:v:55:y:2017:i:2:d:10.1007_s11166-017-9267-x is not listed on IDEAS
    4. Alberini, Anna & Ščasný, Milan, 2018. "The benefits of avoiding cancer (or dying from cancer): Evidence from a four- country study," Journal of Health Economics, Elsevier, vol. 57(C), pages 249-262.
    5. Alberini, Anna & Ščasný, Milan, 2013. "Exploring heterogeneity in the value of a statistical life: Cause of death v. risk perceptions," Ecological Economics, Elsevier, vol. 94(C), pages 143-155.
    6. S. Olofsson & U.-G. Gerdtham & L. Hultkrantz & U. Persson, 2018. "Measuring the end-of-life premium in cancer using individual ex ante willingness to pay," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 19(6), pages 807-820, July.
    7. McDonald, R.L. & Chilton, S.M. & Jones-Lee, M.W. & Metcalf, H.R.T., 2017. "Evidence of variable discount rates and non-standard discounting in mortality risk valuation," Journal of Environmental Economics and Management, Elsevier, vol. 82(C), pages 152-167.
    8. Olofsson , Sara & Gerdtham, Ulf-G. & Hultkrantz, Lars & Persson, Ulf, 2016. "Dread and Risk Elimination Premium for the Value of a Statistical Life," Working Papers 2016:22, Lund University, Department of Economics.
    9. Olofsson, Sara & Gerdtham , Ulf-G & Hultkrantz , Lars & Persson , Ulf, 2016. "Chained Approach vs Contingent Valuation for Estimating the Value of Risk Reduction," Working Papers 2016:34, Lund University, Department of Economics.

    More about this item

    Keywords

    Value of a Statistical Life (VSL); Discrete choice experiments; Mortality risk reductions; Cost–benefit analysis; Risk attributes;

    JEL classification:

    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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