Context and the VSL: Evidence from a Stated Preference Study in Italy and the Czech Republic

55 Pages Posted: 21 Jun 2010

See all articles by Anna Alberini

Anna Alberini

University of Maryland - Department of Agricultural & Resource Economics

Milan Ščasný

Charles University Prague

Date Written: June 21, 2010

Abstract

We report on the results of a survey based on conjoint choice experiments that was specifically designed to investigate the effect of context on the Value of a Statistical Life (VSL), an important input into the calculation of the mortality benefits of environmental policies that reduce premature mortality. We define “context” broadly to include i) the cause of death (respiratory illness, cancer, road traffic accident), ii) the beneficiary of the risk reduction (adult v. child), and iii) the mode of provision of the risk reduction (public program v. private good). The survey was conducted following similar protocols in Italy and the Czech Republic. When we do not distinguish for the cause of death, child and adult VSL are not significantly different from one another in Italy, and the difference is weak in the Czech sample. When we distinguish for the cause of death, we find that child and adult VSLs are different at the 1% level for respiratory illnesses and road-traffic accidents, but do not differ for cancer risks. We find evidence of a “cancer premium” and a “public program premium.” In both countries, the marginal utility of income is about 20% lower among wealthier people, which makes the VSL about 20% higher among respondents with incomes above the sample average. The discount rate implicit in people‘s choices is effectively zero. We conclude that there is heterogeneity in the VSL, and that such heterogeneity is primarily driven by risk characteristics and mode of delivery of the risk reduction, rather than by individual characteristics of the respondent (e.g., income and education). For the most part, our results do not disagree with environmental policy analyses that use the same VSL for children and adults, and that apply a cancer premium.

Keywords: VSL, Conjoint Choice Experiments, Mortality Risk Reductions, Cost-benefit Analysis, Forced Choice Questions

JEL Classification: I18, J17, K32, Q51

Suggested Citation

Alberini, Anna and Ščasný, Milan, Context and the VSL: Evidence from a Stated Preference Study in Italy and the Czech Republic (June 21, 2010). FEEM Working Paper No. 66.2010, Available at SSRN: https://ssrn.com/abstract=1627983 or http://dx.doi.org/10.2139/ssrn.1627983

Anna Alberini (Contact Author)

University of Maryland - Department of Agricultural & Resource Economics ( email )

Symmons Hall, Rm 2200
University of Maryland
College Park, MD 20742-5535
United States
301-405-1267 (Phone)
301-314-9091 (Fax)

Milan Ščasný

Charles University Prague ( email )

Praha 1, 116 36
Czech Republic

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