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Willingness to pay for low-lung-cancer-risk cigarettes in Taiwan

Author

Listed:
  • Man-Ser Jan

    (Economics Department, Chinese Culture University, Taipei, Taiwan, ROC)

  • Tsu-Tan Fu

    (Institute of Economics Academia Sinica, Nankang, Taipei, Taiwan, ROC)

  • Chung L. Huang

    (Department of Agricultural and Applied Economics, University of Georgia, USA)

Abstract

This study develops a conceptual framework based on the random utility model to estimate smokers' willingness to pay (WTP) for the hypothetical low-lung-cancer-risk cigarettes in Taiwan. Following the approach taken by Viscusi (J Polit Econ 1990; 98 : 1253-1269), an individual's subjective risk perception on the probability of developing lung cancer from smoking cigarettes was measured and used in the estimation of demand for safer cigarettes. Other factors that may affect a smoker's purchase decision toward the hypothetically safer cigarettes are also identified. The average WTP for one pack of low-lung-cancer-risk cigarettes is estimated to be NT$44.15, which represents a 152% price increase over the average price of cigarettes currently sold in the market. Copyright © 2004 John Wiley & Sons, Ltd.

Suggested Citation

  • Man-Ser Jan & Tsu-Tan Fu & Chung L. Huang, 2005. "Willingness to pay for low-lung-cancer-risk cigarettes in Taiwan," Health Economics, John Wiley & Sons, Ltd., vol. 14(1), pages 55-67.
  • Handle: RePEc:wly:hlthec:v:14:y:2005:i:1:p:55-67
    DOI: 10.1002/hec.894
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    File URL: http://hdl.handle.net/10.1002/hec.894
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    References listed on IDEAS

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    1. McFadden, Daniel L., 1984. "Econometric analysis of qualitative response models," Handbook of Econometrics,in: Z. Griliches† & M. D. Intriligator (ed.), Handbook of Econometrics, edition 1, volume 2, chapter 24, pages 1395-1457 Elsevier.
    2. Buzby, Jean C. & Skees, Jerry R. & Ready, Richard C., 1995. "Chapter 12: USING CONTINGENT VALUATION TO VALUE FOOD SAFETY: A CASE STUDY OF GRAPEFRUIT AND PESTICIDE RESIDUES," Valuing Food Safety and Nutrition (1995), Regional Research Project NE-165 Private Strategies, Public Policies, and Food System Performance, number 25972.
    3. repec:aph:ajpbhl:1996:86:1:18-24_2 is not listed on IDEAS
    4. Liu, Jin-Tan & Hsieh, Chee-Ruey, 1995. "Risk Perception and Smoking Behavior: Empirical Evidence from Taiwan," Journal of Risk and Uncertainty, Springer, vol. 11(2), pages 139-157, September.
    5. Kenkel, Don, 1990. "Consumer Health Information and the Demand for Medical Care," The Review of Economics and Statistics, MIT Press, vol. 72(4), pages 587-595, November.
    6. Viscusi, W Kip, 1990. "Do Smokers Underestimate Risks?," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1253-1269, December.
    7. 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.
    8. Tsu-Tan Fu & Jin-Tan Liu & James K. Hammitt, 1999. "Consumer Willingness to Pay for Low-Pesticide Fresh Produce in Taiwan," Journal of Agricultural Economics, Wiley Blackwell, vol. 50(2), pages 220-233.
    9. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
    10. Viscusi, W Kip, 1991. "Age Variations in Risk Perceptions and Smoking Decisions," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 577-588, November.
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