The Effect of Risk Context on the Value of a Statistical Life: a Bayesian Meta-model

Abstract

This paper presents the first value of statistical life (VSL) meta-analysis that empirically estimates correction factors for 'out of context' benefits transfer (BT) purposes. In the field of mortality risk reductions elicited willingness to pay values in one risk context, say road safety, are frequently applied in other risk contexts like air pollution. However, differences in risk perception and the population at risk across contexts are likely to result in diverging VSL estimates. In a meta-analysis of 26 international stated preference studies, a Bayesian model is estimated regressing contingent values for mortality risk reductions, originating from three different risk contexts, on the characteristics of the risk reduction itself and additional variables characterizing the underlying studies. A willingness to pay (WTP) premium for mortality risk reductions in the air pollution and general mortality risk context relative to improving road safety is observed. Evaluated at the mean, road safety VSL estimates should be multiplied by a factor 1.8 before being applicable in the air pollution context. Moreover, in an illustrative BT exercise we find limited overlap in the set of context specific predictive VSL distributions. Consequently, 'out of context' BT results in a substantial overor underestimation of the VSL.

Reference Dependence Effects on WTA and WTP Value Functions and Their Disparity

“…Although this conclusion in itself is not new (see, e.g., Dekker et al 2011), our findings suggest a potentially important reason why these errors are as large as they are. That is, if there are differences in the (risk) context and the reference (risk) levels between the situation in which existing values were elicited and the new situation to which these existing values are applied, not controlling for these differences will lead to estimates that are off the mark.…”

Modelling risk adaptation and mitigation behaviour under different climate change scenarios

“…Compared to the WTP approach, asking people for their WTAC for (potential) welfare losses is a considerably less applied approach in the field of environmental risk valuation (e.g. Dekker et al 2011), partly due to the criticism that the WTAC measure is not constrained by disposable income and can therefore result in relatively high values (e.g. Arrow et al 1993).…”

Composite Valuation of Immaterial Damage in Flooding: Value of Statistical Life, Value of Statistical Evacuation and Value of Statistical Injury

“…By asking respondents to make choices in such situations, their intended behaviour is obtained, from which 'stated preferences' can be derived. The areas where SP is widely used include environmental studies, health care, transport and labour economics (see for example de Blaeij et al, 2003;Dekker et al, 2011;Kluve and Schaffner, 2008;Bellavance et al, 2009). The VOSL that is derived by means of these techniques is often used in cost-benefit analyses as a (best available) approximation of value of an avoided fatality in a particular risk context (see Viscusi and Aldy, 2003).…”

“…This benefit transfer from one context to another offers but an approximation of VOSL. Also contemporary literature presents conflicting evidence on potential usefulness of benefit transfer to policymakers (Richardson and Loomis, 2009, Baskaran et al, 2010, Alberini and Šcasný, 2011, Dekker et al, 2011. While valuation of VOSL might in theory be expected to stay stable independently of risk context, space or time, empirical studies witness differences in such valuations throughout risk contexts, countries and various moments in time.…”