Scale, Scope and Cognition: Context Analysis of Multiple Stated Choice Experiments on the Values of Life and Limb

Tinbergen Institute Discussion Paper 12-046/3

44 Pages Posted: 29 Apr 2012

See all articles by Maria Bockarjova

Maria Bockarjova

affiliation not provided to SSRN

Piet Rietveld(Deceased)

affiliation not provided to SSRN; Tinbergen Institute

Erik T. Verhoef

VU University Amsterdam - Department of Spatial Economics; Vrije Universiteit Amsterdam, School of Business and Economics; Tinbergen Institute

Date Written: April 4, 2012

Abstract

In this paper we use data from an SP study on flood safety in the Netherlands, and elicit individual preferences for reduction of risk to life and limb. We perform context analysis to test the robustness of fatality risk valuation throughout choice experiments. The main interest of this paper is VOSL sensitivity to the valuation of correlated risks (scope effect). Besides, we explore the role of cognition on the stability of valuation across choice experiments using age and education. We pool data from multiple choice experiments and apply nested and mixed logit models in our analysis. We confirm statistically significant sensitivity to scope, comparing VOSL estimates for the test group in a choice experiment where correlated risks were present (risks of fatality, injury and evacuation) to an experiment where only fatality risk is valued. We find that the origin of differences in VOSL valuations across the choice experiments lies in differences in age and educational attainment, and may therefore be related to cognitive abilities of respondents. In particular, we conclude that higher VOSL sensitivity to scope is most prominently present among respondents of senior age (65 and older) and respondents without college education. This finding has important implications for discrete choice modeling and the use of obtained values in cost-benefit analyses.

Keywords: stated preferences, value of statistical life, value of statistical injury, value of statistical evacuation, flood risk

JEL Classification: C010, C330, C830, C900, D120, D610, Q510, Q540

Suggested Citation

Bockarjova, Maria and Rietveld(Deceased), Piet and Verhoef, Erik T., Scale, Scope and Cognition: Context Analysis of Multiple Stated Choice Experiments on the Values of Life and Limb (April 4, 2012). Tinbergen Institute Discussion Paper 12-046/3, Available at SSRN: https://ssrn.com/abstract=2047042 or http://dx.doi.org/10.2139/ssrn.2047042

Maria Bockarjova (Contact Author)

affiliation not provided to SSRN ( email )

Piet Rietveld(Deceased)

affiliation not provided to SSRN

Tinbergen Institute ( email )

Burg. Oudlaan 50
Rotterdam, 3062 PA
Netherlands

Erik T. Verhoef

VU University Amsterdam - Department of Spatial Economics ( email )

De Boelelaan 1105
1081HV Amsterdam
Netherlands
+31 020 4446094 (Phone)
+31 020 4446004 (Fax)

Vrije Universiteit Amsterdam, School of Business and Economics ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands

Tinbergen Institute ( email )

Gustav Mahlerplein 117
Amsterdam, 1082 MS
Netherlands

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