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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. 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.
    2. 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.
    3. 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.
    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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    More about this item

    Keywords

    Value of a statistical life; Willingness to pay; Life expectancy; Risk reduction; Contingent valuation;
    All these keywords.

    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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