The Value of Private Safety Versus the Value of Public Safety

Posted: 11 Feb 1998

See all articles by Magnus Johannesson

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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Date Written: Undated

Abstract

In this study we report an attempt to measure the WTP of car owners for a reduction of the probability of being killed in a traffic accident. One group of respondents is offered 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. Moreover, there is a strong positive correlation between the magnitude of the WTP for the private safety device and the risks a respondent faces in traffic. 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 a pure altruist may, but need not, be willing to pay more for a private risk reduction than for a uniform risk reduction of the same magnitude. This is also true for a wealth-focused altruist. Still, our empirical results are surprising, and further empirical research seems warranted.

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

Suggested Citation

Johanneson, Magnus and Johansson, Per-Olov and O'Conor, Richard M., The Value of Private Safety Versus the Value of Public Safety (Undated). Available at SSRN: https://ssrn.com/abstract=4943

Magnus Johanneson

Stockholm School of Economics - Department of Economics ( email )

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

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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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