Much of the justification for environmental rulemaking rests on estimates of the benefits to society of reduced mortality rates. Yet the literature providing estimates of the willingness to pay (WTP) ...for mortality risk reductions measures the value that healthy, prime-aged adults place on reducing their risk of dying, whereas the majority of statistical lives saved by environmental programs, according to epidemiological studies, appear to be the lives of older people and people with chronically impaired health. This paper provides an empirical assessment of the effects of age and baseline health on WTP for mortality risk reductions by reporting the results of two contingent valuation surveys designed to test the above hypotheses. One survey was administered in-person to residents of Hamilton, Ontario, and the other to a nationally representative sample of U.S. residents using the Internet. Both surveys elicited respondents' WTP for reductions in mortality risk of different magnitudes. Respondents were limited to persons aged 40 years and older, including those older than 60, to examine the impact of age on WTP. Extensive information was collected about each respondent's health status to see whether it systematically influenced WTP. Our results provide weak support for the notion that WTP declines with age, but only after age 70. Specifically, in our Canadian sample, WTP declines by about 30% after age 70 compared with WTP at younger ages. There is no such statistically significant decline, however, in the U.S. sample. We similarly find no support for the idea that people who have cancer or chronic heart or lung disease are willing to pay less to reduce their risk of dying than people without these illnesses. If anything, people with these illnesses are willing to pay more.
Much of the justification for environmental rulemaking rests on estimates of the benefits to society of reduced mortality rates. Yet the literature providing estimates of the willingness to pay (WTP) ...for mortality risk reductions measures the value that healthy, prime-aged adults place on reducing their risk of dying, whereas the majority of statistical lives saved by environmental programs, according to epidemiological studies, appear to be the lives of older people and people with chronically impaired health. This paper provides an empirical assessment of the effects of age and baseline health on WTP for mortality risk reductions by reporting the results of two contingent valuation surveys designed to test the above hypotheses. One survey was administered in-person to residents of Hamilton, Ontario, and the other to a nationally representative sample of U.S. residents using the Internet. Both surveys elicited respondents' WTP for reductions in mortality risk of different magnitudes. Respondents were limited to persons aged 40 years and older, including those older than 60, to examine the impact of age on WTP. Extensive information was collected about each respondent's health status to see whether it systematically influenced WTP. Our results provide weak support for the notion that WTP declines with age, but only after age 70. Specifically, in our Canadian sample, WTP declines by about 30% after age 70 compared with WTP at younger ages. There is no such statistically significant decline, however, in the U.S. sample. We similarly find no support for the idea that people who have cancer or chronic heart or lung disease are willing to pay less to reduce their risk of dying than people without these illnesses. If anything, people with these illnesses are willing to pay more.
Most benefit-cost analyses of reductions in air pollutants and other pollutants carrying mortality risks rely on estimates of the value of reductions in such risks produced by compensating wage ...studies, or contingent valuation studies that value risk reductions in the context of transport or job-related accidents. As the authors argue below, these estimates are inappropriate when valuing risk changes produced by environmental programs. The objectives of this paper are to explain why these estimates are inappropriate and to describe an improved approach to valuing reductions in risk of death from environmental programs, especially programs to reduce air pollution. The authors have implemented this approach in a pilot study in Tokyo, Japan. The paper provides estimates of the value of a statistical life based on the pilot study and describes extensions of the approach based on test results. The preliminary results from the Tokyo pilot indicate that individuals are able to distinguish between different magnitudes of small changes in mortality risks and between the same change in these risks occurring at different times (although the latter has not yet been subjected to an external scope test). Changes to the survey and a big increase in sample size may improve performance on the internal validity tests and the results of the scope tests. Although the current results can only be considered suggestive, if they were to remain after administration of the survey to a larger sample, and subject to some other caveats, they would imply that the VSL's currently used in benefit-cost analyses of environmental policies are significant overestimates.
Most benefit-cost analyses of reductions in air pollutants and other pollutants carrying mortality risks rely on estimates of the value of reductions in such risks produced by compensating wage ...studies, or contingent valuation studies that value risk reductions in the context of transport or job-related accidents. As we argue below, these estimates are inappropriate when valuing risk changes produced by environmental programs. The objectives of this paper are to explain why these estimates are inappropriate and to describe an improved approach to valuing reductions in risk of death from environmental programs, especially programs to reduce air pollution. We have implemented this approach in a pilot study in Tokyo, Japan. The paper provides estimates of the value of a statistical life based on the pilot study and describes extensions of the approach based on test results. Our preliminary results from the Tokyo pilot indicate that individuals are able to distinguish between different magnitudes of small changes in mortality risks and between the same change in these risks occurring at different times (although the latter has not yet been subjected to an external scope test). Changes to the survey and a big increase in sample size may improve performance on the internal validity tests and the results of the scope tests. Although the current results can only be considered suggestive, if they were to remain after administration of the survey to a larger sample and subject to some other caveats, they would imply that the VSL's currently used in benefit-cost analyses of environmental policies are significant overestimates.
Most benefit-cost analyses of reductions in air pollutants and other pollutants carrying mortality risks rely on estimates of the value of reductions in such risks produced by compensating wage ...studies, or contingent valuation studies that value risk reductions in the context of transport or job-related accidents. As we argue below, these estimates are inappropriate when valuing risk changes produced by environmental programs. The objectives of this paper are to explain why these estimates are inappropriate and to describe an improved approach to valuing reductions in risk of death from environmental programs, especially programs to reduce air pollution. We have implemented this approach in a pilot study in Tokyo, Japan. The paper provides estimates of the value of a statistical life based on the pilot study and describes extensions of the approach based on test results. Our preliminary results from the Tokyo pilot indicate that individuals are able to distinguish between different magnitudes of small changes in mortality risks and between the same change in these risks occurring at different times (although the latter has not yet been subjected to an external scope test). Changes to the survey and a big increase in sample size may improve performance on the internal validity tests and the results of the scope tests. Although the current results can only be considered suggestive, if they were to remain after administration of the survey to a larger sample and subject to some other caveats, they would imply that the VSL's currently used in benefit-cost analyses of environmental policies are significant overestimates.
Most benefit-cost analyses of reductions in air pollutants and other pollutants carrying mortality risks rely on estimates of the value of reductions in such risks produced by compensating wage ...studies, or contingent valuation studies that value risk reductions in the context of transport or job-related accidents. As we argue below, these estimates are inappropriate when valuing risk changes produced by environmental programs. The objectives of this paper are to explain why these estimates are inappropriate and to describe an improved approach to valuing reductions in risk of death from environmental programs, especially programs to reduce air pollution. We have implemented this approach in a pilot study in Tokyo, Japan. The paper provides estimates of the value of a statistical life based on the pilot study and describes extensions of the approach based on test results. Our preliminary results from the Tokyo pilot indicate that individuals are able to distinguish between different magnitudes of small changes in mortality risks and between the same change in these risks occurring at different times (although the latter has not yet been subjected to an external scope test). Changes to the survey and a big increase in sample size may improve performance on the internal validity tests and the results of the scope tests. Although the current results can only be considered suggestive, if they were to remain after administration of the survey to a larger sample and subject to some other caveats, they would imply that the VSL's currently used in benefit-cost analyses of environmental policies are significant overestimates.
Much of the justification for environmental rulemaking rests on estimates of the benefits to society of reduced mortality rates. This research aims to fill gaps in the literature that estimates the ...value of a statistical life (VSL) by designing and implementing a contingent valuation study for persons 40 to 75 years of age, and eliciting WTP for reductions in current and future risks of death. Targeting this age range also allows us to examine the impact of age on WTP and, by asking respondents to complete a detailed health questionnaire, to examine the impact of health status on WTP. This survey was self-administered by computer to 930 persons in Hamilton, Ontario, in 1999. The survey uses audio and visual aids to communicate baseline risks of death and risk changes and are tested for comprehension of probabilities before being asked WTP questions. We credit these efforts at risk communication with the fact that mean WTP of respondents faced with larger risk reductions exceeds mean WTP of respondents faced with smaller risk reductions; that is, our respondents pass the external scope test. Our mean WTP estimates for a contemporaneous risk reduction imply a VSL ranging approximately from $1.2 to $3.8 million (1999 C$), depending on the size of the risk change valued, which is at or below estimates commonly used in environmental cost-benefit analyses by the Canadian and the U.S. governments. Interestingly, we find that age has no effect on WTP until roughly age 70 and above (the VSL is about $0.6 million for this age group) and that physical health status, with the possible exception of having cancer, has no effect. We also find that being mentally healthy raises WTP substantially. In addition, compared with estimates of WTP for contemporaneous risk reductions, mean WTP estimates for risk reductions of the same magnitude but beginning at age 70 are more than 50% smaller.
Much of the justification for environmental rulemaking rests on estimates of the benefits to society of reduced mortality rates. This research aims to fill gaps in the literature that estimates the ...value of a statistical life (VSL) by designing and implementing a contingent valuation study for persons 40 to 75 years of age, and eliciting WTP for reductions in current and future risks of death. Targeting this age range also allows us to examine the impact of age on WTP and, by asking respondents to complete a detailed health questionnaire, to examine the impact of health status on WTP. This survey was self-administered by computer to 930 persons in Hamilton, Ontario, in 1999. The survey uses audio and visual aids to communicate baseline risks of death and risk changes and are tested for comprehension of probabilities before being asked WTP questions. We credit these efforts at risk communication with the fact that mean WTP of respondents faced with larger risk reductions exceeds mean WTP of respondents faced with smaller risk reductions; that is, our respondents pass the external scope test. Our mean WTP estimates for a contemporaneous risk reduction imply a VSL ranging approximately from $1.2 to $3.8 million (1999 C$), depending on the size of the risk change valued, which is at or below estimates commonly used in environmental cost-benefit analyses by the Canadian and the U.S. governments. Interestingly, we find that age has no effect on WTP until roughly age 70 and above (the VSL is about $0.6 million for this age group) and that physical health status, with the possible exception of having cancer, has no effect. We also find that being mentally healthy raises WTP substantially. In addition, compared with estimates of WTP for contemporaneous risk reductions, mean WTP estimates for risk reductions of the same magnitude but beginning at age 70 are more than 50% smaller.
Much of the justification for environmental rulemaking rests on estimates of the benefits to society of reduced mortality rates. This research aims to fill gaps in the literature that estimates the ...value of a statistical life (VSL) by designing and implementing a contingent valuation study for persons 40 to 75 years of age, and eliciting WTP for reductions in current and future risks of death. Targeting this age range also allows us to examine the impact of age on WTP and, by asking respondents to complete a detailed health questionnaire, to examine the impact of health status on WTP. This survey was self-administered by computer to 930 persons in Hamilton, Ontario, in 1999. The survey uses audio and visual aids to communicate baseline risks of death and risk changes and are tested for comprehension of probabilities before being asked WTP questions. We credit these efforts at risk communication with the fact that mean WTP of respondents faced with larger risk reductions exceeds mean WTP of respondents faced with smaller risk reductions; that is, our respondents pass the external scope test. Our mean WTP estimates for a contemporaneous risk reduction imply a VSL ranging approximately from $1.2 to $3.8 million (1999 C$), depending on the size of the risk change valued, which is at or below estimates commonly used in environmental cost-benefit analyses by the Canadian and the U.S. governments. Interestingly, we find that age has no effect on WTP until roughly age 70 and above (the VSL is about $0.6 million for this age group) and that physical health status, with the possible exception of having cancer, has no effect. We also find that being mentally healthy raises WTP substantially. In addition, compared with estimates of WTP for contemporaneous risk reductions, mean WTP estimates for risk reductions of the same magnitude but beginning at age 70 are more than 50% smaller.
Much of the justification for environmental rulemaking rests on estimates of the benefits to society of reduced mortality rates. This research aims to fill gaps in the literature that estimates the ...value of a statistical life (VSL) by designing and implementing a contingent valuation study for persons 40 to 75 years of age, and eliciting WTP for reductions in current and future risks of death. Targeting this age range also allows us to examine the impact of age on WTP and, by asking respondents to complete a detailed health questionnaire, to examine the impact of health status on WTP. This survey was self-administered by computer to 930 persons in Hamilton, Ontario, in 1999. The survey uses audio and visual aids to communicate baseline risks of death and risk changes and are tested for comprehension of probabilities before being asked WTP questions. We credit these efforts at risk communication with the fact that mean WTP of respondents faced with larger risk reductions exceeds mean WTP of respondents faced with smaller risk reductions; that is, our respondents pass the external scope test. Our mean WTP estimates for a contemporaneous risk reduction imply a VSL ranging approximately from $1.2 to $3.8 million (1999 C$), depending on the size of the risk change valued, which is at or below estimates commonly used in environmental cost-benefit analyses by the Canadian and the U.S. governments. Interestingly, we find that age has no effect on WTP until roughly age 70 and above (the VSL is about $0.6 million for this age group) and that physical health status, with the possible exception of having cancer, has no effect. We also find that being mentally healthy raises WTP substantially. In addition, compared with estimates of WTP for contemporaneous risk reductions, mean WTP estimates for risk reductions of the same magnitude but beginning at age 70 are more than 50% smaller.
