1997 Progress Report: Valuation of Risks to Human Health Insensitivity to Magnitude?

EPA Grant Number: R825312
Title: Valuation of Risks to Human Health Insensitivity to Magnitude?
Investigators: Hammitt, James K. , Graham, John
Current Investigators: Hammitt, James K. , Corso, Phaedra , Graham, John
Institution: Harvard University
EPA Project Officer: Lee, Sonja
Project Period: October 15, 1996 through October 14, 1999
Project Period Covered by this Report: October 15, 1996 through October 14, 1997
Project Amount: $377,584
RFA: Decision-Making and Valuation for Environmental Policy (1996) RFA Text |  Recipients Lists
Research Category: Economics and Decision Sciences

Objective:

The objectives of the proposed research are to:

  • Determine whether (and to what extent) insensitivity to magnitude variation is a barrier to eliciting valid estimates of WTP for reduction of risks to human health;

  • Develop and test tools for the CV practitioner that enhance respondent understanding of the nature and magnitude of the health risk reduction to be offered;

  • Perform rigorous, external (split sample) tests of tools designed to address the problem of insensitivity to magnitude variation; and

  • Offer constructive guidance to CV practitioners, based on results from the proposed research and the existing literature, on what steps can be taken in the design of CV-health studies to reduce the problem of insensitivity to magnitude variation.

Progress Summary:

We have conducted two nationwide random-digit-dial telephone surveys with approximately 1,000 respondents each. In the first survey, WTP for an automobile safety device that would reduce mortality risk from vehicle accidents was elicited using standard double-bounded dichotomous-choice questions. In the second survey, WTP was elicited for reductions in risks associated with automobile accidents, bacterial food contamination, and blood transfusion. In each case, subsets of respondents were presented with different numerical magnitudes of risk reduction, allowing split-sample estimation of sensitivity to scope.

The second survey tested several methodological alternatives including probability analogies and a "dual-format" elicitation approach. Probablity analogies were developed to assist respondents in understanding the magnitude of the specified risk reductions. We considered the use of several analogies (e.g., minutes in a year, inches in a mile, empty seats in a football stadium). In the second survey, half the respondents were asked to rate the helpfulness of these alternative analogies in understanding probabilities. In addition, this same half of the sample was presented with a minutes per year analogy for each risk that was valued (e.g., for the automobile risks, a baseline 20/100,000 risk is described as "like 105 minutes in a year"); this analogy was shown by our focus group and pilot tests to be most helpful.

A second methodological refinement we tested is the "dual-format" elicitation. Under the standard CV approach, WTP for a specific good (i.e., magnitude of risk reduction) is elicited. In the dual approach, we estimate the magnitude of the good for which respondents' WTP equals a pre-specified amount. That is, we estimate the "indifference risk," or risk reduction offered such that the respondent would be indifferent between purchasing it and not (at the specified price), and test whether the indifference risk is sensitive to changes in the price of the good.

Research Results

Our results reflect substantial variation between topics and details of the elicitation process. In the automobile context, we consistently found statistically significant differences in WTP using the dual-format approach but not using the conventional format. Results were similar using both external (between respondent) and internal (within respondent) comparisons.

We found no difference in WTP to reduce the risk of food contamination, despite an order-of-magnitude variation in the probability increment. This lack of sensitivity differs from the approximate two-fold difference in WTP obtained by Hayes et al. (1995) in an experimental, repeated-auction setting.

Comparison of WTP for qualitatively different risks of viral infection transmitted by blood transfusion indicate some sensitivity to scope of the risk. The results differ between cases using WTP for the hepatitis test alone, or WTP for the hepatitis test conditional on the hospital screening for HIV. The adding-up test is violated when the hepatitis-virus test is conditioned on the hospital testing for HIV, but not when the hepatitis-virus test is offered alone.

In all three risk contexts, use of the probability analogies to convey risk had modest effect on improving the consistency of estimated and theoretical sensitivity to scope.

Future Activities:

We are currently developing materials for a mixed telephone/mail/telephone format survey. This format will allow us to use visual aids for communicating risk magnitudes to respondents. In contrast to the limited means of communicating risks that are available in a telephone survey, these visual materials may lead to improved understanding of the specific risk changes and greater consistency of estimated WTP with theoretical expectations.

Journal Articles:

No journal articles submitted with this report: View all 21 publications for this project

Supplemental Keywords:

RFA, Economic, Social, & Behavioral Science Research Program, Scientific Discipline, Health Risk Assessment, Economics, decision-making, Ecology and Ecosystems, Economics & Decision Making, contingent valuation, ecosystem valuation, policy analysis, social psychology, surveys, risk preferences, valuation, decision analysis, economic benefits, valuing environmental quality, environmental values, preference formation, standards of value, cost benefit, environmental policy, psychological attitudes, public values, magnitude variation, public policy, stated preference, willingness to pay, interviews

Progress and Final Reports:

Original Abstract
  • 1998 Progress Report
  • Final Report