The Value of Private Safety versus the Value of Public Safety
In this study we report an attempt to measure the WTP of car owners for a reduction of the probability of being killed in a traffic accident. One group of respondents is offered a safety device to be installed in their car, while another group is offered a public safety program (improved road quality) which results in the same size risk reduction. In terms of the value of a statistical life, our results are very reasonable. Moreover, there is a strong positive correlation between the magnitude of the WTP for the private safety device and the risks a respondent faces in traffic. However, the WTP for the private safety device is higher than the WTP for the public safety measure. Drawing on a model developed by Jones-Lee (1991), we show that a pure altruist may, but need not, be willing to pay more for a private risk reduction than for a uniform risk reduction of the same magnitude. This is also true for a wealth-focused altruist. Still, our empirical results are surprising, and further empirical research seems warranted.
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|Date of creation:||Feb 1996|
|Publication status:||Published in Journal of Risk and Uncertainty, 1996, pages 263-275.|
|Contact details of provider:|| Postal: The Economic Research Institute, Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden|
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