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The value of statistical life : a contingent investigation in China

  • Wang, Hua
  • He, Jie

Economic analyses of development projects and policies often involve assigning an economic value to changes in the risk of loss of human life. A typical term used in the economic analyses is the value of statistical life, which reflects the aggregation of individuals'willingness to pay for fatal risk reduction and therefore the economic value to society to reduce the statistical incidence of premature death in the population by one. Studies on the value of a statistical life have been extensively conducted in the developed world; however, few such studies can be found for developing countries. This paper presents a study that estimates individuals'willingness to pay for cancer risk prevention in three provinces of China. The results imply that the mean value of willingness to pay for a cancer vaccine that is effective for one year is 759 yuan, with a much lower median value of 171 yuan. The estimated income elasticity of willingness to pay is 0.42. Using data on the incidence of cancer illness and death in the population, these willingness to pay figures imply that the marginal value of reducing the anticipated incidence of cancer mortality by one in the population is 73,000 yuan and an average value of 795,000 yuan, which are about six and 60 times average household annual income, respectively. The big difference between the marginal value and the average value of fatal risk reduction corresponds to a very low estimated elasticity of willingness to pay with respect to fatal risk reduction. This finding challenges the validity of previous studies of the value of a statistical life, which are mostly based on average willingness-to-pay values of mortality risk reduction.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 5421.

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Date of creation: 01 Sep 2010
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Handle: RePEc:wbk:wbrwps:5421
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  1. Hammitt, James K & Graham, John D, 1999. "Willingness to Pay for Health Protection: Inadequate Sensitivity to Probability?," Journal of Risk and Uncertainty, Springer, vol. 18(1), pages 33-62, April.
  2. Cropper, Maureen L. & G. Sussman, Frances, 1990. "Valuing future risks to life," Journal of Environmental Economics and Management, Elsevier, vol. 19(2), pages 160-174, September.
  3. Wang, Hua, 1997. "Treatment of "Don't-Know" Responses in Contingent Valuation Surveys: A Random Valuation Model," Journal of Environmental Economics and Management, Elsevier, vol. 32(2), pages 219-232, February.
  4. Wang, Hua & Whittington, Dale, 2005. "Measuring individuals' valuation distributions using a stochastic payment card approach," Ecological Economics, Elsevier, vol. 55(2), pages 143-154, November.
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