1998 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. , 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, 1997 through October 14, 1998
Project Amount: $377,584
RFA: Decision-Making and Valuation for Environmental Policy (1996) RFA Text | Recipients Lists
Research Category: Economics and Decision Sciences
- 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.
We have conducted two nationwide random-digit-dial telephone surveys with approximately 1,000 respondents each. A third survey, using a telephone-mail-telephone format is currently in the field.
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. In the second survey, half the respondents were asked to rate the helpfulness of alternative analogies in understanding probabilities (e.g., minutes in a year, inches in a mile, empty seats in a football stadium) and were presented with a minutes per year analogy for each risk (e.g., a 20/100,000 risk is like 105 minutes in a year). In addition, we tested an "indifference- risk" elicitation method in which respondents are asked how large a risk reduction would be required for them to purchase a safety device at a stated price.
Our results reflect substantial variation between topics and details of the elicitation process, with some variations yielding results that are consistent with the theoretically prescribed proportionality between WTP and probability change. In the automobile context, we consistently find statistically significant differences in WTP using the indifference-risk approach (eliciting indifference risk reductions for specified prices in the second survey) but not using the conventional format (eliciting WTP for specified risk changes in the first survey). Similar conclusions are obtained using both external (between subsample) and internal (within subsample) comparisons. In the indifference- risk elicitation, estimates based on the subsample of respondents indicating high confidence in their answers are roughly proportional to the price difference; estimates based on less-confident respondents are alternatively inadequately and excessively sensitive to the price difference. We found no difference in WTP to reduce the risk of food contamination, despite an order-of-magnitude variation in the probability increment.
The telephone-mail-telephone survey that is currently in the field includes visual aids to communicate the magnitude of risk reductions. These include a field of 25,000 dots of which the appropriate number are colored, linear and logarithmic risk ladders. The visual aids are randomly assigned to subsamples of respondents and we will investigate whether sensitivity of WTP to risk reduction differs among subsamples.
Data from the telephone-mail-telephone survey will be available in spring 1999. We will analyze these data in order to determine whether alternative visual aids enhance the sensitivity of elicited WTP to the magnitude of risk reduction.