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The value of a statistical life under changes in ambiguity

Author

Listed:
  • Han Bleichrodt

    (Erasmus School of Economics
    Australian National University)

  • Christophe Courbage

    (Haute Ecole de Gestion de Genève
    University of Applied Sciences Western Switzerland (HES-SO))

  • Béatrice Rey

    (Univ Lyon, Université Lumière Lyon 2)

Abstract

The value of a statistical life (VSL) is a key parameter in the analysis of government policy. Most policy decisions are made under ambiguity. This paper studies the effect of changes in ambiguity perception on the VSL. We propose a definition of increases in ambiguity perception based on Ekern’s (1980) definition of increases in risk. Ambiguity aversion alone is not sufficient to lead to an increase in the VSL when the decision maker perceives more ambiguity. Our results highlight the importance of higher order ambiguity attitudes, particularly ambiguity prudence.

Suggested Citation

  • Han Bleichrodt & Christophe Courbage & Béatrice Rey, 2019. "The value of a statistical life under changes in ambiguity," Journal of Risk and Uncertainty, Springer, vol. 58(1), pages 1-15, February.
    • Handle: RePEc:kap:jrisku:v:58:y:2019:i:1:d:10.1007_s11166-019-09296-3
    DOI: 10.1007/s11166-019-09296-3
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    Cited by:

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    2. Watanabe, Masahide & Fujimi, Toshio, 2022. "Ambiguity of scientific probability predictions and willingness-to-pay for climate change mitigation policies," Research in Economics, Elsevier, vol. 76(4), pages 386-402.
    3. Camille Cornand & Maria Alejandra Erazo Diaz & Béatrice Rey & Adam Zylbersztejn, 2023. "On the robustness of higher order attitudes to ambiguity framing," Working Papers 2318, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    4. Luciana Echazu & Diego C. Nocetti, 2020. "Willingness to pay for morbidity and mortality risk reductions during an epidemic. Theory and preliminary evidence from COVID-19," The Geneva Risk and Insurance Review, Palgrave Macmillan;International Association for the Study of Insurance Economics (The Geneva Association), vol. 45(2), pages 114-133, September.

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    More about this item

    Keywords

    Value of a statistical life; Ambiguity; Prudence; Smooth ambiguity model; Neo-additive preferences;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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