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Willingness to Pay for Private and Public Safety: Why the Difference?

  • Svensson, Mikael

    ()

    (Department of Business, Economics, Statistics and Informatics)

  • Vredin Johansson, Maria

    (Dept of Economics Uppsala University and Swedish National Road and Transport Research Institute)

Previous research on the willingness to pay (WTP) for risk reductions has almost systematically found the mean WTP for public risk reductions to be, both economically and statistically, significantly smaller than the mean WTP for private risk reductions. In this paper, we use socio-economic and social-psychological variables to gain insights into this, according to economic theory, anomalous result. Based on the results from a purpose-made survey, we find that part of the discrepancy can be explained by the individuals' age and his/her attitudes towards privately and publicly provided goods in general. Due to differences in attitudes, the public and private goods are in fact perceived as a two different goods, even if the risk reductions are of equal magnitudes. The results therefore suggest that, in cases where the elicited WTP is intended for public policy purposes, the survey context need to be public is consumer sovereignty should reign.

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Paper provided by Örebro University, School of Business in its series Working Papers with number 2007:2.

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Length: 33 pages
Date of creation: 30 Apr 2007
Date of revision:
Publication status: Published in Accident Analysis & Prevention, 2010, pages 1205-1212.
Handle: RePEc:hhs:oruesi:2007_002
Contact details of provider: Postal: Örebro University School of Business, SE - 701 82 ÖREBRO, Sweden
Phone: 019-30 30 00
Fax: 019-33 25 46
Web page: http://www.oru.se/Institutioner/Handelshogskolan-vid-Orebro-universitet/

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