Measuring the value of life saving from consumer reactions to new information

Past studies have relied on cross-section patterns of risky behavior to generate estimates of the value of life saving. This approach is colored by several problems that affect the reliability of the results in potentially serious ways. It is difficult to separate the risk components from the (dis)u...

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Bibliographic Details
Published in:Journal of public economics 1984-11, Vol.25 (1), p.53-81
Main Authors: Ippolito, Pauline M., Ippolito, Richard A.
Format: Article
Language:English
Subjects:
Behavior
Consumption
Economic models
Economic theory
Employment
Life
Lifesaving
Risk
Risk premiums
Smoking
Utility
Valuation
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Summary:Past studies have relied on cross-section patterns of risky behavior to generate estimates of the value of life saving. This approach is colored by several problems that affect the reliability of the results in potentially serious ways. It is difficult to separate the risk components from the (dis)utility attributes of work or consumption; to avoid selectivity biases; and to disentangle user costs (e.g. wearing a face mask) from the risk premium paid for accepting risk. To circumvent some of these difficulties, this paper uses a different approach, one which exploits the information about the value of risk reduction that is provided by changing consumption patterns over time brought about by changes in available information about risks. This approach makes it possible to more reliably estimate the pure effects of risks on behavior and to generate unbiased distributions of the value of life saving. The case of cigarette consumption over time provides an ideal setting to illustrate this methodology.
ISSN:0047-2727
1879-2316
DOI:10.1016/0047-2727(84)90044-6