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Valuing Statistical Lives Or Life Years? A Choice Experimental Study

Listed author(s):
  • Nerhagen, Lena


  • LI, Chuan-Zhong


Although the value of reducing mortality risks and that of reducing life year losses are closely related to each other, the valuation literature seems to treat them rather separately resulting in conflicting value estimates. While the former is more concerned with saved statistical lives from accidents, the latter is more directed to the lost life years due to air pollution etc. In this paper, we attempt to conduct an integrated valuation study for both types of values in the same choice experimental design. We formulate an econometric model which simultaneously takes into account both mortality risk reduction and life year loss. The results indicates that conditional on given remaining life years upon survival, the marginal willingness to pay is constant for each statistical life saved, which indicates strong scope effect. The marginal value per extra life year, however, is a diminishing function of the number of life years. We have also examined the effect of other covariates such as the respondents’ characteristics (e.g. gender and age), their self-confidence in making choices, and possible categorical behavior on the final value estimates.

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Paper provided by Swedish National Road & Transport Research Institute (VTI) in its series Working Papers with number 2010:11.

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Length: 19 pages
Date of creation: 11 Nov 2010
Handle: RePEc:hhs:vtiwps:2010_011
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VTI, Transport Economics, P.O. Box 6056, SE-171 06 Solna, Sweden

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  1. Kenshi Itaoka & Aya Saito & Alan Krupnick & Wiktor Adamowicz & Taketoshi Taniguchi, 2006. "The Effect of Risk Characteristics on the Willingness to Pay for Mortality Risk Reductions from Electric Power Generation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 33(3), pages 371-398, 03.
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