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Risk-Risk Analysis


  • Viscusi, W Kip


Constraints on the use of benefit-cost tests have generated increased interest in risk-risk analysis as a regulatory test. The effect on individual mortality of the income losses arising from regulatory expenditures can be determined from direct empirical estimates, which this article surveys. The article proposes an alternative formulation based on information on the value of life and the marginal propensity to spend on health, which implies a loss of one statistical life for every & million in expenditures. Occupational injury and fatality costs caused by expenditures represent another type of risk tradeoff that could be considered within risk-risk analysis or, more generally, a benefit-cost test. Copyright 1994 by Kluwer Academic Publishers

Suggested Citation

  • Viscusi, W Kip, 1994. "Risk-Risk Analysis," Journal of Risk and Uncertainty, Springer, vol. 8(1), pages 5-17, January.
  • Handle: RePEc:kap:jrisku:v:8:y:1994:i:1:p:5-17

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    References listed on IDEAS

    1. Osborne, Martin J & Rubinstein, Ariel, 1998. "Games with Procedurally Rational Players," American Economic Review, American Economic Association, vol. 88(4), pages 834-847, September.
    2. Tversky, Amos & Kahneman, Daniel, 1992. "Advances in Prospect Theory: Cumulative Representation of Uncertainty," Journal of Risk and Uncertainty, Springer, vol. 5(4), pages 297-323, October.
    3. Wu, George & Gonzalez, Richard, 1998. "Common Consequence Conditions in Decision Making under Risk," Journal of Risk and Uncertainty, Springer, vol. 16(1), pages 115-139, April.
    4. Haruvy, Ernan & Erev, Ido & Sonsino, Doron, 2001. "The Medium Prizes Paradox: Evidence from a Simulated Casino," Journal of Risk and Uncertainty, Springer, vol. 22(3), pages 251-261, May.
    5. Chateauneuf, Alain & Wakker, Peter, 1999. "An Axiomatization of Cumulative Prospect Theory for Decision under Risk," Journal of Risk and Uncertainty, Springer, vol. 18(2), pages 137-145, August.
    6. George Wu & Richard Gonzalez, 1999. "Nonlinear Decision Weights in Choice Under Uncertainty," Management Science, INFORMS, vol. 45(1), pages 74-85, January.
    7. McKenzie, Craig R. M. & Ferreira, Victor S. & Mikkelsen, Laurie A. & McDermott, Kristine J. & Skrable, Ryan P., 2001. "Do Conditional Hypotheses Target Rare Events?," Organizational Behavior and Human Decision Processes, Elsevier, vol. 85(2), pages 291-309, July.
    8. Gregory, Robin & Lichtenstein, Sarah & Slovic, Paul, 1993. "Valuing Environmental Resources: A Constructive Approach," Journal of Risk and Uncertainty, Springer, vol. 7(2), pages 177-197, October.
    9. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
    10. Viscusi, W Kip, 1989. "Prospective Reference Theory: Toward an Explanation of the Paradoxes," Journal of Risk and Uncertainty, Springer, vol. 2(3), pages 235-263, September.
    11. Craig R. Fox & Amos Tversky, 1998. "A Belief-Based Account of Decision Under Uncertainty," Management Science, INFORMS, vol. 44(7), pages 879-895, July.
    12. Wakker, Peter & Tversky, Amos, 1993. "An Axiomatization of Cumulative Prospect Theory," Journal of Risk and Uncertainty, Springer, vol. 7(2), pages 147-175, October.
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    Cited by:

    1. G. Dionne & P. Lanoie, 2002. "How to Make a Public Choice about the Value of a Statistical Life : The Case of Road Safety," THEMA Working Papers 2002-14, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    2. Glenn C. Blomquist, 2004. "Self-Protection and Averting Behavior, Values of Statistical Lives, and Benefit Cost Analysis of Environmental Policy," Review of Economics of the Household, Springer, vol. 2(1), pages 89-110, March.
    3. Viscusi, W Kip & Aldy, Joseph E, 2003. "The Value of a Statistical Life: A Critical Review of Market Estimates throughout the World," Journal of Risk and Uncertainty, Springer, vol. 27(1), pages 5-76, August.
    4. Gerdtham, Ulf-G. & Johannesson, Magnus, 2005. "Business cycles and mortality: results from Swedish microdata," Social Science & Medicine, Elsevier, vol. 60(1), pages 205-218, January.
    5. Gerdtham, Ulf-G. & Lothgren, Mickael, 2000. "On stationarity and cointegration of international health expenditure and GDP," Journal of Health Economics, Elsevier, vol. 19(4), pages 461-475, July.
    6. repec:clg:wpaper:2011-02 is not listed on IDEAS
    7. Kuchler, Fred & Golan, Elise H., 1999. "Assigning Values To Life: Comparing Methods For Valuing Health Risks," Agricultural Economics Reports 34037, United States Department of Agriculture, Economic Research Service.

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