IDEAS home Printed from https://ideas.repec.org/a/spr/sochwe/v51y2018i1d10.1007_s00355-018-1111-y.html
   My bibliography  Save this article

Deciding about human lives: an experimental measure of risk attitudes under prospect theory

Author

Listed:
  • Emmanuel Kemel

    () (GREGHEC-CNRS, HEC-Paris)

  • Corina Paraschiv

    () (Paris Descartes University, Institut Universitaire de France)

Abstract

Abstract For public policies in the health, security or safety domains, the main consequences concern the number of human lives that are saved or lost, and are uncertain ex-ante. In classic economic evaluations of such policies, losses and gains of human lives are often monetized and aggregated with other costs and benefits. Uncertainty about human lives is thus treated as uncertainty about monetary consequences. In this paper, we question whether people risk human lives as they risk money. We present an experiment comparing risk attitudes towards human lives and towards money under prospect theory. The results show that respondents treat the two attributes differently when losses are involved. Specifically, the decisions involving human lives are characterized by less elevated probability weighting in the loss domain and higher loss aversion compared to decisions involving money. These findings suggest that public preferences may differ from the cost-benefit analysis recommendations.

Suggested Citation

  • Emmanuel Kemel & Corina Paraschiv, 2018. "Deciding about human lives: an experimental measure of risk attitudes under prospect theory," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 51(1), pages 163-192, June.
  • Handle: RePEc:spr:sochwe:v:51:y:2018:i:1:d:10.1007_s00355-018-1111-y
    DOI: 10.1007/s00355-018-1111-y
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s00355-018-1111-y
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Rabin, Matthew, 2002. "A perspective on psychology and economics," European Economic Review, Elsevier, vol. 46(4-5), pages 657-685, May.
    2. Krawczyk, Michał Wiktor, 2015. "Probability weighting in different domains: The role of affect, fungibility, and stakes," Journal of Economic Psychology, Elsevier, vol. 51(C), pages 1-15.
    3. W. Viscusi, 2010. "The heterogeneity of the value of statistical life: Introduction and overview," Journal of Risk and Uncertainty, Springer, vol. 40(1), pages 1-13, February.
    4. van der Pol, Marjon & Ruggeri, Matteo, 2008. "Is risk attitude outcome specific within the health domain?," Journal of Health Economics, Elsevier, vol. 27(3), pages 706-717, May.
    5. Attema, Arthur E. & Brouwer, Werner B.F. & l’Haridon, Olivier, 2013. "Prospect theory in the health domain: A quantitative assessment," Journal of Health Economics, Elsevier, vol. 32(6), pages 1057-1065.
    6. Arthur E. Attema & Werner B.F. Brouwer & Olivier l'Haridon, 2013. "A quantification of prospect theory in the health domain," Economics Working Paper Archive (University of Rennes 1 & University of Caen) 201321, Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS.
    7. Mohammed Abdellaoui & Han Bleichrodt & Olivier L’Haridon, 2008. "A tractable method to measure utility and loss aversion under prospect theory," Journal of Risk and Uncertainty, Springer, vol. 36(3), pages 245-266, June.
    8. Peter C. Fishburn & Philip D. Straffin, 1989. "Equity Considerations in Public Risks Evaluation," Operations Research, INFORMS, vol. 37(2), pages 229-239, April.
    9. Peter Wakker & Daniel Deneffe, 1996. "Eliciting von Neumann-Morgenstern Utilities When Probabilities Are Distorted or Unknown," Management Science, INFORMS, vol. 42(8), pages 1131-1150, August.
    10. Aurélien Baillon & Han Bleichrodt & Umut Keskin & Olivier L’haridon & Chen Li, 2018. "The Effect of Learning on Ambiguity Attitudes," Post-Print halshs-01525391, HAL.
    11. Ellen Peters & Irwin P. Levin, 2008. "Dissecting the risky-choice framing effect: Numeracy as an individual-difference factor in weighting risky and riskless options," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 3(6), pages 435-448, August.
    12. Henry Stott, 2006. "Cumulative prospect theory's functional menagerie," Journal of Risk and Uncertainty, Springer, vol. 32(2), pages 101-130, March.
    13. Fredrik Carlsson & Dinky Daruvala & Henrik Jaldell, 2012. "Do administrators have the same priorities for risk reductions as the general public?," Journal of Risk and Uncertainty, Springer, vol. 45(1), pages 79-95, August.
    14. Bernard, Carole & Rheinberger, Christoph & Treich, Nicolas, 2017. "Catastrophe Aversion and Risk Equity in an Interdependent World," TSE Working Papers 17-811, Toulouse School of Economics (TSE).
    15. Mohammed Abdellaoui & Emmanuel Kemel, 2014. "Eliciting Prospect Theory When Consequences Are Measured in Time Units: “Time Is Not Money”," Management Science, INFORMS, vol. 60(7), pages 1844-1859, July.
    16. Cropper, Maureen L & Aydede, Sema K & Portney, Paul R, 1992. "Rates of Time Preference for Saving Lives," American Economic Review, American Economic Association, vol. 82(2), pages 469-472, May.
    17. Adrian Bruhin & Helga Fehr-Duda & Thomas Epper, 2010. "Risk and Rationality: Uncovering Heterogeneity in Probability Distortion," Econometrica, Econometric Society, vol. 78(4), pages 1375-1412, July.
    18. Drazen Prelec, 1998. "The Probability Weighting Function," Econometrica, Econometric Society, vol. 66(3), pages 497-528, May.
    19. M. Hammerton & M. W. Jones-Lee & V. Abbott, 1982. "Technical Note—Equity and Public Risk: Some Empirical Results," Operations Research, INFORMS, vol. 30(1), pages 203-207, February.
    20. Fetherstonhaugh, David & Slovic, Paul & Johnson, Stephen & Friedrich, James, 1997. "Insensitivity to the Value of Human Life: A Study of Psychophysical Numbing," Journal of Risk and Uncertainty, Springer, vol. 14(3), pages 283-300, May-June.
    21. Gerdtham, Ulf-G & Johannesson, Magnus, 2002. "Do Life-Saving Regulations Save Lives?," Journal of Risk and Uncertainty, Springer, vol. 24(3), pages 231-249, May.
    22. Paul Slovic & Sarah Lichtenstein & Baruch Fischhoff, 1984. "Modeling the Societal Impact of Fatal Accidents," Management Science, INFORMS, vol. 30(4), pages 464-474, April.
    23. Ralph L. Keeney, 1980. "Utility Functions for Equity and Public Risk," Management Science, INFORMS, vol. 26(4), pages 345-353, April.
    24. Ralph L. Keeney, 1980. "Evaluating Alternatives Involving Potential Fatalities," Operations Research, INFORMS, vol. 28(1), pages 188-205, February.
    25. Subramanian, Uma & Cropper, Maureen, 2000. "Public Choices between Life Saving Programs: The Tradeoff between Qualitative Factors and Lives Saved," Journal of Risk and Uncertainty, Springer, vol. 21(1), pages 117-149, July.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:sochwe:v:51:y:2018:i:1:d:10.1007_s00355-018-1111-y. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Rebekah McClure). General contact details of provider: http://www.springer.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.