Variation in Value of Life Estimates Based on Willingness to Pay for Mortality Risk Reduction Depending on the Level of Subjective Risk Perception
DOI:
https://doi.org/10.17308/econ.2026.2/13808Keywords:
value of a statistical life, air pollution, endogeneity, instrumental variablesAbstract
Subject. Economic and mathematical tools for estimating the variation in the value of a statistical life determined on the basis of willingness to pay for mortality risk reduction, taking into account the level of subjective mortality risk perception.
Purpose. To develop economic and mathematical tools that allow estimating the sensitivity of the value of a statistical life, determined on the basis of willingness to pay for mortality risk reduction, to the level of subjective risk perception.
Methodology. The study relies on the contingent valuation methodology for willingness to pay within the stated preferences framework. We used a double-bounded dichotomous choice question format with a quasi-experimental approach, namely the instrumental variables method. The empirical basis comprised a sample of 921 residents of port cities.
Results. The developed toolkit allows quantifying the sensitivity of the value of a statistical life to the subjective risk perception indicator. The obtained results demonstrate that an increase in the subjective risk estimate by one unit can lead to an increase in the corresponding value of life estimate by 74% (ceteris paribus).
Conclusions. The application of the instrumental variables method showed that the influence of subjective risk perception on the value of life may be significantly underestimated in standard models due to the endogeneity problem. The latter can cause bias in the coefficient reflecting the effect of this factor on willingness to pay. The practical significance of the work lies in obtaining quantitative benchmarks for possible variation in value of life estimates under the influence of external factors (e.g., information campaigns) that can change the subjective risk perception of the population before the study is conducted.
Downloads
References
Akhtar, S., Saleem, W., Nadeem, V. M., Shahid, I., & Ikram, A. (2017). Assessment of willingness to pay for improved air quality using contingent valuation method. Global Journal of Environmental Science and Management, 3(3), 279-286. DOI:10.22034/gjesm.2017.03.03.005
Alberini, A. (2005). What is a life worth? Robustness of VSL values from contingent valuation surveys. Risk Analysis: An International Journal, 25(4), 783-800. DOI:10.1111/j.1539-6924.2005.00646.x
Alolayan, M. A., Evans, J. S., & Hammitt, J. K. (2017). Valuing mortality risk in Kuwait: Stated-preference with a new consistency test. Environmental and Resource Economics, 66(4), 629-646. DOI: 10.1007/s10640-015-9958-1
Carson, R. T., Flores, N. E., & Meade, N. F. (2001). Contingent valuation: controversies and evidence. Environmental And Resource Economics, 19(2), 173-210.
Carson, R. T., & Groves, T. (2007). Incentive and informational properties of preference questions. Environmental And Resource Economics, 37(1), 181-210. DOI: 10.1007/s10640-007-9124-5
Corso, Ph. S., Hammitt, Ja. K., & Graham, J. D. (2001). Valuing mortality-risk reduction: using visual aids to improve the validity of contingent valuation. Journal of risk and Uncertainty, 23(2), 165-184.
Cropper, M., Hammitt, J. K., & Robinson, L. A. (2011). Valuing mortality risk reductions: progress and challenges. Annual Review of Resource Economics, 3(1), 313-336.
Ducruet, C., Martin, B. P., Séné, M. A., Prete, M. L., Sun, L., Itoh, H., & Pigne, Y. (2024). Ports and their influence on local air pollution and public health: A global analysis. The Science of The Total Enviroment, 915, 170099. DOI: 10.1016/j.scitotenv.2024.170099
Eom, Y. S., Ahn, S., & Shadbegian, R. (2025). Willingness to pay to reduce mortality risks from particulate matter and value of statistical life: Evidence from stated air purifier rental choices in South Korea. Journal of Environmental Management, 373, 123407. DOI: 10.1016/j.jenvman.2024.123407
Hammitt, J. K., & Graham, J. D. (1999). Willingness to pay for health protection: inadequate sensitivity to probability? Journal of risk and uncertainty, 18(1), 33-62.
Hammitt, J. K., & Herrera-Araujo, D. (2018). Peeling back the onion: Using latent class analysis to uncover heterogeneous responses to stated preference surveys. Journal of Environmental Economics and Management, 87, 165-189.
Hanemann, M., Loomis, J., & Kanninen, B. (1991). Statistical efficiency of double‐bounded dichotomous choice contingent valuation. American journal of agricultural economics, 73(4), 1255-1263.
Hoffmann, S., Qin, P., Krupnick, A., Badrakh, B., Batbaatar, S., Altangerel, E., & Sereeter, L. (2012). The willingness to pay for mortality risk reductions in Mongolia. Resource and Energy Economics, 34(4), 493-513.
Istamto, T., Houthuijs, D., & Lebret, E. (2014). Willingness to pay to avoid health risks from road-traffic-related air pollution and noise across five countries. Science of the total environment, 497, 420-429.
Leiter, A. M., & Pruckner, G. J. (2009). Proportionality of willingness to pay to small changes in risk: the impact of attitudinal factors in scope tests. Environmental and Resource Economics, 42(2), 169-186. DOI: 10.1007/s10640-008-9214-z
Lloyd-Smith, P., Schram, C., Adamowicz, W., & Dupont, D. (2018). Endogeneity of risk perceptions in averting behavior models. Environmental and Resource Economics, 69(2), 217-246. DOI: 10.1007/s10640-016-0075-6
Lopez-Feldman, A. (2012). Introduction to contingent valuation using Stata.
Navrud, S. (2001). Valuing health impacts from air pollution in Europe. Environmental and Resource Economics, 20(4), 305-329.
Orgill, J., Shaheed, A., Brown, J., & Jeuland, M. (2013). Water quality perceptions and willingness to pay for clean water in peri-urban Cambodian communities. Journal of water and health, 11(3), 489-506.
Persson, U., Norinder, A., Hjalte, K., & Gralén, K. (2001). The value of a statistical life in transport: findings from a new contingent valuation study in Sweden. Journal of Risk and Uncertainty, 23(2), 121-134.
Sajise, A. J., Samson, J. N., Quiao, L., Sibal, J., Raitzer, D. A., & Harder, D. (2021). Contingent valuation of nonmarket benefits in project economic analysis: a guide to good practice. Asian Development Bank.
Schelling, T. C. (1968). The life you save may be your own. Problems in public expenditure, 127-162.
Viscusi, W. K. (2004). The value of life: estimates with risks by Occupation and Industry. Economic Inquiry, 42(1), 29-48. DOI:10.2139/ssrn.416600
Viscusi, W. K. (2008). How to value a life. Journal of economics and finance, 32(4), 311-323.
Viscusi, W. K., & Hersch, J. (2008). The mortality cost to smokers. Journal of Health Economics, 27(4), 943-958.
Wang, H., & Mullahy, J. (2006). Willingness to pay for reducing fatal risk by improving air quality: a contingent valuation study in Chongqing, China. Science of the total environment, 367(1), 50-57.
Keller, E., Newman, J. E., Jorm, L. R., Chambers, G.M., & Ortmann, A. (2021). How much is a human life worth? A systematic review. Value in Health, 24(10), 1531–1541. DOI: 10.1016/j.jval.2021.04.003
Wang, Y., & Zhang, Y. S. (2009). Air quality assessment by contingent valuation in Ji'nan, China. Journal of environmental management, 90(2), 1022-1029.
Whitehead, J. C. (2006). Improving willingness to pay estimates for quality improvements through joint estimation with quality perceptions. Southern Economic Journal, 73(1), 100-111.
Поплавко, П. С., & Нагапетян, А. Р. (2024). Вариация оценок готовности платить в зависимости от величины снижения риска смерти от загрязнения воздуха. Теория и практика общественного развития, (5), 127–135. [Poplavko, P. S., & Nagapetyan, A. R. (2024). Variation in willingness-to-pay estimates depending on the magnitude of mortality risk reduction from air pollution. Theory and Practice of Social Development, (5), 127–135. (In Russian).] DOI: 10.24158/tipor.2024.5.16
Поплавко, П. С., & Нагапетян, А. Р. (2025a). О влиянии субъективного восприятия риска смерти на готовность платить за его снижение (на примере загрязнения воздуха). Теория и практика общественного развития, (7), 142–150. [Poplavko, P. S., & Nagapetyan, A. R. (2025a). The Impact of Subjective Risk Perception of Mortality on Willingness to Pay for its Reduction (A Case Study of Air Pollution). Theory and Practice of Social Development, (7), 142–150. (In Russian).] DOI: 10.24158/tipor.2025.7.18
Поплавко, П. С., & Нагапетян, А. Р. (2025b). Разработка экономико-математического инструментария для оценки стоимости жизни с учетом убывающей предельной готовности платить за снижение дополнительной единицы риска смерти. Теория и практика общественного развития, (6), 166–175. [Poplavko, P. S., & Nagapetyan, A. R. (2025b). Development of Economic and Mathematical Tools for Estimating the Cost of Living Taking into Account the Decreasing Marginal Willingness to Pay for the Reduction of an Additional Unit of Death Risk. Theory and Practice of Social Development, (6), 166–175. (In Russian).] DOI: 10.24158/tipor.2025.6.19
