Risk, Self-Protection, and Ex Ante Economic Value
We develop three propositions about the ex ante value of reduced risk. If there is a continuous outcome distribution and if self-protection influences outcome probability and severity, then: (1) unobservable utility terms cannot be eliminated from the ex ante value expressions; (2) knowledge of the convexity or the nonconvexity of dose-response functions is insufficient to sign changes in these expressions; and (3) self-protection expenditures need not be a lower bound measure of these expressions. Therefore, many restrictions applied in recent empirical work on the economic value of risk changes are not immediately transferable to settings where endogenous risks prevail.
|Date of creation:||May 1990|
|Date of revision:|
|Contact details of provider:|| Postal: 578 Heady Hall, Ames, Iowa 50011-1070|
Phone: (515) 294-1183
Fax: (515) 294-6336
Web page: http://www.card.iastate.edu/
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:ias:cpaper:90-wp57. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()
If references are entirely missing, you can add them using this form.