Working paper

Valuing non-marginal changes in mortality and morbidity risk

Daniel Herrera-Araujo, Christoph Rheinberger, and James K. Hammitt

Abstract

Many stated-preference studies that seek to estimate the marginal willingness-to-pay (WTP) for reductions in mortality or morbidity risk su˙er from inadequate scope sensitivity. One possible reason is that the risk reductions presented to respondents are too small to be meaningful. Survey responses may thus not accurately reflect respondents’ preferences for health and safety. In this paper we propose a novel approach to estimating the value per statistical life (VSL) or the value per statistical case (VSC) based on larger risk reductions measurable as percentages. While such non-marginal risk reductions are easier to understand, they introduce well known biases. We propose a methodology to de-bias VSL and VSC estimates derived from the evaluation of non-marginal risk reductions and present a proof of concept using simulated stated preference data.

Keywords

Value per Statistical Life; Value per Statistical Case; non-marginal risks reductions; scope sensitivity;

JEL codes

  • D10: General
  • D81: Criteria for Decision-Making under Risk and Uncertainty
  • I1: Health
  • Q51: Valuation of Environmental Effects

Replaced by

Daniel Herrera-Araujo, Christoph Rheinberger, and James K. Hammitt, Valuing non-marginal changes in mortality and morbidity risk, Journal of Health Economics, vol. 84, n. 102627, July 2022.

Reference

Daniel Herrera-Araujo, Christoph Rheinberger, and James K. Hammitt, Valuing non-marginal changes in mortality and morbidity risk, TSE Working Paper, n. 22-1331, April 2022.

See also

Published in

TSE Working Paper, n. 22-1331, April 2022