Valuing future risks to life

Cropper, Maureen; Sussman, Frances G.

doi:10.1016/0095-0696(90)90066-8

Cited by 87 publications

(58 citation statements)

References 11 publications

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“…As expected, WTP may vary with individual characteristics such as income (Gerking et al, 1988;Flores and Carson, 1997;Bloom and Sevilla, 2004;Alberini et al, 2006) and age (Shepard and Zeckhauser, 1984;Jones-Lee et al, 1985;Cropper and Sussman, 1990;Krupnick, et al, 2002;Hersch and Viscusi, 2005). There is also some limited evidence about the effect of health status on WTP Alberini et al, 2004;Smith, 2004;Jones-Lee and Loomes, 2004;Alberini and Chiabai, 2005) etc.…”

Section: Individual Characteristicsmentioning

confidence: 99%

The value of mortality risk reductions in Delhi, India

2007

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Road accidents kill nearly 1.2 million people each year worldwide, two-thirds of whom live in developing countries. Traffic crashes may indeed become the third leading cause of death in developing countries by the year 2020 (Murray and Lopez, 1996). For governments in developing countries to make informed decisions about investments in traffic safety, it is imperative that the benefits of road traffic improvements be monetized and compared with costs. This, however, requires estimates of the value of reductions in risk of death.The goal of the dissertation is to provide estimates of the value of mortality risk reductions in a traffic safety context in Delhi, India. To estimate the value of road safety improvements in Delhi requires understanding the nature of developing country traffic risks. Methods of valuing traffic fatalities used in high-income countries based on seatbelt use or purchase of safer cars are not applicable here.In my survey I asked 1200 commuters what they would pay to reduce their own risk of dying as a (a) pedestrian, (b) driver of a two-wheeler, and (c) commuter, regardless of travel mode. These scenarios mirror the bulk of fatal accidents in Delhi. I find that mean WTP for mortality risk reduction increases with the size of risk reduction, as predicted by economic theory.WTP for a given risk change increases with income and education. The estimation results broadly confirm the Bayesian updating assumption, in that WTP increases with baseline exposure to risk, measured by commute time, whether the respondent travels as part of his job and whether he drives a two-wheeler. Mean WTP is three times larger for a respondent who drives a two-wheeler and travels on the job than for one who does not.The results of my survey indicate that the VSL is individuated, i.e., it varies across groups of potential beneficiaries of traffic safety programs (two-wheeler drivers, persons with bachelors degree, etc.). For the most highly exposed individuals-the VSL is about $150,000 (PPP, 2005

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Section: Individual Characteristicsmentioning

confidence: 99%

The value of mortality risk reductions in Delhi, India

2007

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“…where D j is the probability of dying at age j (see Usher, 1973;Conley, 1976;Bergstrom, 1982;Cropper and Sussman, 1990).…”

Section: B Sensitive Populations: the Elderlymentioning

confidence: 99%

Urban Environmental Health and Sensitive Populations: How Much are the Italians Willing to Pay to Reduce Their Risks?

Alberini

Chiabai

2005

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Abstract:We use contingent valuation to elicit WTP for a reduction in the risk of dying for cardiovascular and respiratory causes, the most important causes of premature mortality associated with heat wave and air pollution, among the Italian public. The purpose of this study is three-fold. First, we obtain WTP and VSL figures that can be applied when estimating the benefits of heat advisories, other policies that reduce the mortality effects of extreme heat, and environmental policies that reduce the risk of dying for cardiovascular and respiratory causes. Second, our experimental study design allows us to examine the sensitivity of WTP to the size of the risk reduction. Third, we examine whether the WTP of populations that are especially sensitive to extreme heat and air pollution-such as the elderly, those in compromised health, and those living alone and/or physically impaired-is different from that of other individuals. We find that WTP, and hence the VSL, depends on the risk reduction, respondent age and health status. WTP increases with the size of the risk reduction, but is not strictly proportional to it. All else the same, older individuals are willing to pay less for a given risk reduction than younger individuals of comparable characteristics. Poor health tends to raise WTP, all else the same. Our results support the notion that the VSL is "individuated." JEL Classification: Q51, Q54.

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“…With perfect capital markets, this consumption rate of interest should be equal to the market interest rate. If individuals face borrowing constraints, the consumption rate of interest may be higher than the market interest rate (Cropper and Sussman, 1990;Cropper and Portney, 1990). In earlier research, the rates at which individuals discounted future risks for current money usually fall in the range between 0.3 and 14% (Moore and Viscusi, 1990;Johannesson and Johansson, 1996;Horowitz and Carson, 1990;Alberini et al, 2006;Alberini and Chiabai, 2007;.…”

Section: Previous Literaturementioning

confidence: 99%

“…This can be done by observing risk-wage compensating differentials in the labor market (Viscusi, 1993;Viscusi and Aldy, 2003), purchases of safety equipment (Jenkins et al, 2001), time spent in risk-reducing activities (Blomquist et al, 1988), or by directly asking people to report their Willingness to Pay for a hypothetical risk reduction (Johannesson et al, 1997, Krupnick et al, 2002. Economic theory suggests that people should discount such risk reductions if they occur in the future but are paid for now (Cropper and Sussman, 1990), and several studies have documented the existence and degree of such discounting (Horowitz and Carson, 1990;Johannesson and Johansson, 1996;Alberini et al, 2004, Tsuge et al, 2005, Hammitt and Liu, 2004, Alberini et al, 2006.…”

Section: Introductionmentioning

confidence: 99%

Rates of Time Preferences for Saving Lives in the Hazardous Waste Site Context

Alberini

Tonin

Turvani³

2009

SSRN Journal

103

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SummaryWhat is the rate at which people discount future lives saved? The answer to this question has important implications when comparing policies on the grounds of cost per life saved, especially in the context of hazardous waste site remediation, where risk reductions may occur at different times, depending on the permanence of the remedy. We estimate this rate by asking a sample of Italian residents to choose between saving 100 lives now and X lives in T years, where both X and T are varied to the respondents. Assuming constant exponential discounting, the responses to these questions imply a rate of time preference for saving lives of 12%. There is little evidence that this rate is systematically associated with observable individual characteristics of the respondent. There is, however, strong evidence that it declines with the time horizon when the lives would be saved, ranging from 16% for T=10 to less than 4% for T³40. We fit a hyperbolic discount model, finding that it yields a similar value of the discount function for T=10 (the shortest horizon we used in the survey), and that it discounts the future less heavily than the regular exponential discounting model for longer time horizon. We apply our estimated discount functions to two alternate remedial plans for a heavily contaminated area in Italy, and find that-due to the high estimated discount rates-the less permanent solution is found to be more cost-effective.

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Valuing future risks to life

Cited by 87 publications

References 11 publications

The value of mortality risk reductions in Delhi, India

The value of mortality risk reductions in Delhi, India

Urban Environmental Health and Sensitive Populations: How Much are the Italians Willing to Pay to Reduce Their Risks?

Rates of Time Preferences for Saving Lives in the Hazardous Waste Site Context

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