Baseline Risk and Preference for Reductions in Risk‐to‐Life

John K. Horowitz and Richard Carson

Risk Analysis, 1993, vol. 13, issue 4, 457-462

Abstract: The typical model of individual attitudes toward risk‐to‐life suggests that an individual's willingness to pay for a reduction in mortality risk increases with the baseline risk. The higher‐baseline hypothesis has been the subject of several empirical tests but results have so far been mixed. Using survey evidence, we present a situation in which subjects do prefer to reduce risks for which the baseline is higher. This finding is robust to several alternative explanations. Survey responses reflect subjects’concerns about government effectiveness in risk reduction, environmental effects associated with the various hazards, and other idiosyncratic elements of the risks; however, these concerns appear to occur in addition to, not in lieu of, the preference to reduce higher risks.

Date: 1993
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https://doi.org/10.1111/j.1539-6924.1993.tb00746.x

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Persistent link: https://EconPapers.repec.org/RePEc:wly:riskan:v:13:y:1993:i:4:p:457-462

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