Economics at your fingertips  

Endogeneity of Risk Perceptions in Averting Behavior Models

Patrick Lloyd-Smith (), Craig Schram, Wiktor Adamowicz () and Diane Dupont ()
Additional contact information
Craig Schram: University of Alberta

Environmental & Resource Economics, 2018, vol. 69, issue 2, No 1, 217-246

Abstract: Abstract This paper examines the relationship between averting expenditures / choices and perceived health risks. Models in the literature often employ risk perceptions as explanatory variables without addressing the potential endogeneity of the perceived risk. We examine the implications of ignoring endogeneity in this context, using an application to both drinking water choices and expenditures and perceived health risks. Our data are from an Internet-based cross-Canada survey that employs a novel interactive risk ladder to elicit mortality risk perceptions relating to water. We employ two fundamentally different methods to assess the impact of risk perceptions on behavior: an analysis of expenditures on alternate water sources and a model of proportional choice of water sources. Results suggest the presence of averting behavior with respect to perceived mortality risks and that the estimated effect of water risks is greater than 3 times higher when using approaches that correct for endogeneity compared to models that do not.

Keywords: Averting behavior; Risk perceptions; Water quality; Human health; Latent class models; Expenditure model; Endogeneity (search for similar items in EconPapers)
JEL-codes: Q51 Q53 I12 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7) Track citations by RSS feed

Downloads: (external link) Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
http://www.springer. ... al/journal/10640/PS2

DOI: 10.1007/s10640-016-0075-6

Access Statistics for this article

Environmental & Resource Economics is currently edited by Ian J. Bateman

More articles in Environmental & Resource Economics from Springer, European Association of Environmental and Resource Economists Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla ().

Page updated 2020-08-09
Handle: RePEc:kap:enreec:v:69:y:2018:i:2:d:10.1007_s10640-016-0075-6