VALUING STATISTICAL LIVES OR LIFE YEARS? A CHOICE EXPERIMENTAL STUDY

Lena Nerhagen and Chuan-Zhong Li ()
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Lena Nerhagen: VTI, Postal: Dept. of Transport Economics, P.O. Box 920, SE-781 29 Borlänge, Sweden

No 2010:11, Working Papers from Swedish National Road & Transport Research Institute (VTI)

Abstract: Although the value of reducing mortality risks and that of reducing life year losses are closely related to each other, the valuation literature seems to treat them rather separately resulting in conflicting value estimates. While the former is more concerned with saved statistical lives from accidents, the latter is more directed to the lost life years due to air pollution etc. In this paper, we attempt to conduct an integrated valuation study for both types of values in the same choice experimental design.

We formulate an econometric model which simultaneously takes into account both mortality risk reduction and life year loss. The results indicates that conditional on given remaining life years upon survival, the marginal willingness to pay is constant for each statistical life saved, which indicates strong scope effect. The marginal value per extra life year, however, is a diminishing function of the number of life years. We have also examined the effect of other covariates such as the respondents’ characteristics (e.g. gender and age), their self-confidence in making choices, and possible categorical behavior on the final value estimates.

Keywords: value of statistical life; value of life years; stated preference; choice experiment (search for similar items in EconPapers)
JEL-codes: I18 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-hea
Date: 2010-11-11
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