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The Value of Private Safety Versus the Value of Public Safety

JOURNAL OF RISK AND UNCERTAINTY, Vol. 13, No. 3, 1996

Posted: 27 Aug 1996  

Magnus Johannesson

Stockholm School of Economics - Department of Economics

Per-Olov Johansson

Stockholm School of Economics

Richard M. O'Conor

Stockholm School of Economics

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Abstract

In this study, one group of respondents is offered to purchase a safety device to be installed in their car, while another group is offered a public safety program (improved road quality) which results in the same size risk reduction. In terms of the value of a statistical life, our results are very reasonable. However, the WTP for the private safety device is higher than the WTP for the public safety measure. Drawing on a model developed by Jones-Lee (1991), we show that some types of altruists may, but need not, be willing to pay more for a private risk reduction than for a uniform risk reduction of the same magnitude. Still, our empirical results are surprising, and further empirical research seems warranted.

JEL Classification: D61, D91, H51, I10, I12

Suggested Citation

Johannesson, Magnus and Johansson, Per-Olov and O'Conor, Richard M., The Value of Private Safety Versus the Value of Public Safety. JOURNAL OF RISK AND UNCERTAINTY, Vol. 13, No. 3, 1996. Available at SSRN: https://ssrn.com/abstract=4160

Magnus Johanneson

Stockholm School of Economics - Department of Economics ( email )

P.O. Box 6501
Sveavagen 65
S-113 83 Stockholm
Sweden
+46 8 736 9443 (Phone)

HOME PAGE: http://www.hhs.se/Faculty/showperson.htm?personid=198

Per-Olov Johansson (Contact Author)

Stockholm School of Economics ( email )

P.O. Box 6501
Stockholm
SWEDEN
+46 8 736 92 82 (Phone)
+46 8 30 21 15 (Fax)

Richard M. O'Conor

Stockholm School of Economics ( email )

P.O. Box 6501
Stockholm
SWEDEN

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