On the validity of the estimates of the VSL from contingent valuation: Evidence from the Czech Republic

We assess the reliability and validity of estimates of the Value per Statistical Life (VSL) from contingent valuation by administering the same contingent valuation (CV) questionnaire on samples drawn from the population of the Czech Republic five years apart. We use a novel approach in eliciting the WTP for cancer mortality risk reduction, in that we present respondents with two probabilities—that of getting cancer, and that of surviving it. We find that the cancer VSL is somewhat different across the two samples, but this difference is completely explained by income and cancer dread. The WTP is proportional to the size of the cancer mortality risk reduction, and increases with income and with cancer dread. The income elasticity of the VSL is 0.5 to 0.7, and is thus in line with the findings in Masterman and Viscusi (2018). Our estimates of the VSL (approximately €3–4 mill. May 2019 PPP euro) are close to Viscusi and Masterman’s prediction (2017) based on compensating wage studies, less than the estimates from compensating wage studies conducted in the Czech Republic, and similar to estimates from other stated preference studies in the Czech Republic. We conclude that the CV questionnaire and administration procedures produce reliable and stable results, and that construct and criterion validity are likewise good. We interpret these findings as providing support for an approach that expresses very small mortality risks and risk reductions as the product of two probabilities.