Scandinavian Working Papers in Business Administration
Working Papers,
Örebro University, School of Business
No 2007:3: Precautionary Behavior and Willingness to Pay for a Mortality Risk Reduction:Searching for the Expected Relationship
Mikael Svensson ()
Additional contact information
Mikael Svensson: Department of Business, Economics, Statistics and Informatics, Postal: Örebro University, Department of Business, Economics, Statistics and Informatics, SE - 701 82 ÖREBRO, Sweden
Abstract: This paper examines within-sample correlation between six different precautionary behaviors and willingness to pay for a mortality risk reduction. The paper also shows estimates of the value of a statistical life based on seat belt and bicycle helmet usage as well as based on the stated willingness to pay for a risk reduction in traffic mortality. Contrary to the theoretical expectations, no correlation is found between precautionary behavior and willingness to pay, which is problematic for the validity of contingent valuation answers. One major explanation is that females and the elderly take more precaution, but states a lower WTP for a risk reduction. The estimates of VSL from the different approaches are $11.0, $6.4 and $5.5 million from stated WTP, seat belt use and bicycle helmet use, respectively.
Keywords: Value of a Statistical Life; Revealed Preference; Stated Preference; Risk Behavior
27 pages, First version: June 26, 2007. Revised: September 9, 2008. Earlier revisions: February 18, 2008, February 19, 2008, September 9, 2008, September 9, 2008.
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