Monetary values for risk of death from air pollution exposure: a context-dependent scenario with a control for intra-familial altruism

Olivier Chanel and Stéphane Luchini

Journal of Environmental Economics and Policy, 2014, vol. 3, issue 1, 67-91

Abstract: We extend the individual dynamic model of lifetime resource allocation to assess the monetary value given to the increase in survival probabilities for every member of a household induced by improved air quality. We interpret this monetary value as VPF (value of a prevented fatality), which can also be expressed as a flow of discounted VOLY (value of life years) lost, and account for potential altruism towards other household members. We use a French air pollution contingent valuation survey that provides a description of the life-length reduction implied by a change in air pollution exposure. By privatising the public commodity air pollution, we succeed in ruling out any form of altruism (towards others living today and towards future generations) except altruism towards one's family. We estimate a mean VOLY of € 2001 140,000, a 30% premium for VOLY in perfect health w.r.t. average expected health status, and a mean VPF of € 2001 1.45 million for the respondent, all context-specific. In addition, we find an inverted U-shaped relationship between his/her age and VOLY/VPF, and significant benevolence only towards children under 18.

Date: 2014
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Working Paper: Monetary values for risk of death from air pollution exposure: a context-dependent scenario with a control for intra-familial altruism (2014)
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DOI: 10.1080/21606544.2013.863743

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