Willingness to Pay to Reduce Mortality Risks: Evidence from a Three-Country Contingent Valuation Study

38 Pages Posted: 5 Oct 2004

See all articles by Anna Alberini

Anna Alberini

University of Maryland - Department of Agricultural & Resource Economics

Anil Markandya

Basque Centre for Climate Change (BC3); University of Bath

Alistair Hunt

University of Bath - Department of Economics

Date Written: September 2004

Abstract

Valuing a change in the risk of death is a key input into the calculation of the benefits of environmental policies that save lives. Typically such risks are monetized using the Value of a Statistical Life (VSL). Because the majority of the lives saved by environmental policies are those of older persons, there has been much recent debate about whether the VSL should be lower for the elderly to reflect their fewer remaining life years. We conducted a contingent valuation survey in the UK, Italy and France designed to answer this question. The survey was administered in these three countries following a standardized protocol. Persons of age 40 and older were asked questions about their willingness to pay for a specified risk reduction. We use their responses to these questions to estimate the willingness to pay (WTP) for such a risk reduction and VSL. Our results suggest that the VSL ranges between Euro 1.052 and Euro 2.258 million. The VSL is not significantly lower for older persons, but is higher for persons who have been admitted to the hospital or emergency room for cardiovascular and respiratory problems. These results suggest that there is no evidence supporting that VSL should be adjusted to reflect the age of the beneficiaries of environmental policy. They are also partly inconsistent with the QALY-based practice of imputing lower values for persons with a compromised health status. We also find that income is positively and significantly associated with WTP. The income elasticities of the WTP increase gradually with income levels and are typically between 0.15 and 0.5 for current income levels in EU countries. We use the responses to the WTP questions to estimate the value of an extension in remaining life expectancy. We find that the value of a month's extension in life expectancy increases with age and with serious cardiovascular and respiratory illnesses experienced by the respondent. The value of a loss of one year's life expectancy is between Euro 55,000 and Euro 142,000.

Keywords: Value of a statistical life, Willingness to pay, Life expectancy, Risk reduction, Contingent valuation

JEL Classification: H41, H51, I18, I31, J17

Suggested Citation

Alberini, Anna and Markandya, Anil and Hunt, Alistair S. P., Willingness to Pay to Reduce Mortality Risks: Evidence from a Three-Country Contingent Valuation Study (September 2004). FEEM Working Paper No. 111.04. Available at SSRN: https://ssrn.com/abstract=593661 or http://dx.doi.org/10.2139/ssrn.593661

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)

Anil Markandya

Basque Centre for Climate Change (BC3)

Gran Vía 35-2
Bilbao, Vizcaya 48009
Spain

University of Bath ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom

Alistair S. P. Hunt

University of Bath - Department of Economics ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom
+44 (0) 1225+826826 (Phone)
+44 (0) 1225+826381 (Fax)

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