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Willingness to Pay to Reduce Mortality Risks: Evidence from a Three-Country Contingent Valuation Study

Author

Listed:
  • Anna Alberini

    (University of Maryland and Fondazione Eni Enrico Mattei)

  • Alistair Hunt

    (University of Bath)

  • Anil Markandya

    (The World Bank, University of Bath and Fondazione Eni Enrico Mattei)

Abstract

Valuing a change in the risk of death is a key input into the calculation of the benefits of environmental policies that save lives. Typically such risks are monetized using the Value of a Statistical Life (VSL). Because the majority of the lives saved by environmental policies are those of older persons, there has been much recent debate about whether the VSL should be lower for the elderly to reflect their fewer remaining life years. We conducted a contingent valuation survey in the UK, Italy and France designed to answer this question. The survey was administered in these three countries following a standardized protocol. Persons of age 40 and older were asked questions about their willingness to pay for a specified risk reduction. We use their responses to these questions to estimate the willingness to pay (WTP) for such a risk reduction and VSL. Our results suggest that the VSL ranges between €1.052 and €2.258 million. The VSL is not significantly lower for older persons, but is higher for persons who have been admitted to the hospital or emergency room for cardiovascular and respiratory problems. These results suggest that there is no evidence supporting that VSL should be adjusted to reflect the age of the beneficiaries of environmental policy. They are also partly inconsistent with the QALY-based practice of imputing lower values for persons with a compromised health status. We also find that income is positively and significantly associated with WTP. The income elasticities of the WTP increase gradually with income levels and are typically between 0.15 and 0.5 for current income levels in EU countries. We use the responses to the WTP questions to estimate the value of an extension in remaining life expectancy. We find that the value of a month’s extension in life expectancy increases with age and with serious cardiovascular and respiratory illnesses experienced by the respondent. The value of a loss of one year’s life expectancy is between €55,000 and €142,000.

Suggested Citation

  • Anna Alberini & Alistair Hunt & Anil Markandya, 2004. "Willingness to Pay to Reduce Mortality Risks: Evidence from a Three-Country Contingent Valuation Study," Working Papers 2004.111, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2004.111
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    References listed on IDEAS

    as
    1. Krupnick, Alan & Alberini, Anna & Cropper, Maureen & Simon, Nathalie & O'Brien, Bernie & Goeree, Ron & Heintzelman, Martin, 2002. "Age, Health and the Willingness to Pay for Mortality Risk Reductions: A Contingent Valuation Survey of Ontario Residents," Journal of Risk and Uncertainty, Springer, vol. 24(2), pages 161-186, March.
    2. Alberini, Anna & Cropper, Maureen & Krupnick, Alan & Simon, N.B.Nathalie B., 2004. "Does the value of a statistical life vary with age and health status? Evidence from the US and Canada," Journal of Environmental Economics and Management, Elsevier, vol. 48(1), pages 769-792, July.
    3. Persson, Ulf & Norinder, Anna & Hjalte, Krister & Gralén, Katarina, 2001. "The Value of a Statistical Life in Transport: Findings from a New Contingent Valuation Study in Sweden," Journal of Risk and Uncertainty, Springer, vol. 23(2), pages 121-134, September.
    4. Johannesson, Magnus & Johansson, Per-Olov, 1996. "To Be, or Not to Be, That Is the Question: An Empirical Study of the WTP for an Increased Life Expectancy at an Advanced Age," Journal of Risk and Uncertainty, Springer, vol. 13(2), pages 163-174, September.
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    Cited by:

    1. Henrik Andersson, 2008. "Willingness to Pay for Car Safety: Evidence from Sweden," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 41(4), pages 579-594, December.
    2. Ami, Dominique & Aprahamian, Frédéric & Chanel, Olivier & Joulé, Robert-Vincent & Luchini, Stéphane, 2014. "Willingness to pay of committed citizens: A field experiment," Ecological Economics, Elsevier, vol. 105(C), pages 31-39.
    3. Menz, Tobias & Welsch, Heinz, 2010. "Population aging and environmental preferences in OECD countries: The case of air pollution," Ecological Economics, Elsevier, vol. 69(12), pages 2582-2589, October.
    4. World Bank, 2011. "Air Quality Analysis of Ulaanbaatar," World Bank Other Operational Studies 26802, The World Bank.
    5. Dorte Gyrd-Hansen, 2013. "Using the Stated Preference Technique for Eliciting Valuations: The Role of the Payment Vehicle," PharmacoEconomics, Springer, vol. 31(10), pages 853-861, October.
    6. Andrea M. Leiter & Gerald J. Pruckner, 2005. "Dying in an Avalanche: Current Risks and Valuation," School of Economics Working Papers 2005-16, University of Adelaide, School of Economics.
    7. Mellin, Anna & Nerhagen, Lena, 2010. "HEALTH EFFECTS OF TRANSPORT EMISSIONS - A review of the state of the art of methods and data used for external costs calculations," Working Papers 2010:7, Swedish National Road & Transport Research Institute (VTI).
    8. Henrik Andersson & James Hammitt & Gunnar Lindberg & Kristian Sundström, 2013. "Willingness to Pay and Sensitivity to Time Framing: A Theoretical Analysis and an Application on Car Safety," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 56(3), pages 437-456, November.
    9. Adriana Villamarin Garcia, 2011. "Prevenir y calcular una estimacion de los costos de la violencia homicida en Colombia," DOCUMENTOS DE CERAC 009108, CERAC -CENTRO DE RECURSOS PARA EL ANÁLISIS DE CONFLICTOS-.
    10. Stephen C. Newbold, 2011. "Valuing Health Risk Changes Using a Life-Cycle Consumption Framework," NCEE Working Paper Series 201103, National Center for Environmental Economics, U.S. Environmental Protection Agency, revised Apr 2011.
    11. Czajkowski, Mikolaj & Scasný, Milan, 2010. "Study on benefit transfer in an international setting. How to improve welfare estimates in the case of the countries' income heterogeneity?," Ecological Economics, Elsevier, vol. 69(12), pages 2409-2416, October.
    12. Torres, Cati & Faccioli, Michela & Riera Font, Antoni, 2017. "Waiting or acting now? The effect on willingness-to-pay of delivering inherent uncertainty information in choice experiments," Ecological Economics, Elsevier, vol. 131(C), pages 231-240.
    13. Ortiz, Ramon Arigoni & Markandya, Anil & Hunt, Alistair, 2009. "Willingness to Pay for Mortality Risk Reduction Associated with Air Pollution in Sao Paulo," Revista Brasileira de Economia - RBE, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil), vol. 63(1), April.
    14. Dennis Guignet & Anna Alberini, 2013. "Can Property Values Capture Changes in Environmental Health Risks? Evidence from a Stated Preference Study in Italy and the UK," Working Papers 2013.67, Fondazione Eni Enrico Mattei.
    15. Alberini, Anna & Chiabai, Aline, 2007. "Urban environmental health and sensitive populations: How much are the Italians willing to pay to reduce their risks?," Regional Science and Urban Economics, Elsevier, vol. 37(2), pages 239-258, March.
    16. Andrea Leiter, 2011. "Age effects in monetary valuation of reduced mortality risks: the relevance of age-specific hazard rates," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 12(4), pages 331-344, August.
    17. Adriana Villamarín García, 2011. "Prevenir y calcular: una estimación de los costos de la violencia homicida en Colombia," VNIVERSITAS ECONÓMICA 008873, UNIVERSIDAD JAVERIANA - BOGOTÁ.
    18. repec:eee:jeeman:v:87:y:2018:i:c:p:165-189 is not listed on IDEAS
    19. Hoffmann, Sandra & Qin, Ping & Krupnick, Alan & Badrakh, Burmaajav & Batbaatar, Suvd & Altangerel, Enkhjargal & Sereeter, Lodoysamba, 2012. "The willingness to pay for mortality risk reductions in Mongolia," Resource and Energy Economics, Elsevier, vol. 34(4), pages 493-513.
    20. repec:eee:ecolec:v:148:y:2018:i:c:p:36-42 is not listed on IDEAS
    21. Hammitt, James K. & Herrera-Araujo, Daniel, 2017. "Peeling back the onion: Using latent class analysis to uncover heterogeneous responses to stated preference surveys," TSE Working Papers 17-766, Toulouse School of Economics (TSE).

    More about this item

    Keywords

    Value of a statistical life; Willingness to pay; Life expectancy; Risk reduction; Contingent valuation;

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income

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