Grantee Research Project Results
1997 Progress Report: Mortality Risk Valuation And Stated Preference Methods: An Exploratory Study
EPA Grant Number: R824711Title: Mortality Risk Valuation And Stated Preference Methods: An Exploratory Study
Investigators: Krupnick, Alan J. , Cropper, Maureen , Alberini, Anna , Belli, Robert
Current Investigators: Krupnick, Alan J. , Cropper, Maureen , Simon, Nathalie , Alberini, Anna , Belli, Robert
Institution: Resources for the Future , University of Maryland and World Bank , University of Michigan , University of Colorado at Boulder
Current Institution: Resources for the Future , University of Colorado at Boulder , University of Maryland and World Bank , University of Michigan
EPA Project Officer: Chung, Serena
Project Period: October 1, 1995 through September 30, 1997
Project Period Covered by this Report: October 1, 1996 through September 30, 1997
Project Amount: $114,822
RFA: Valuation and Environmental Policy (1995) RFA Text | Recipients Lists
Research Category: Environmental Justice
Objective:
Recent analyses of the benefits and costs of environmental regulations, such as EPA's Retrospective Cost-Benefit Analysis of the 1970 Clean Air Act and EPA's Regulatory Impact Analyses for Ozone and Particulates, pivot around the estimates of the benefits from reducing mortality risks. Each of these studies rely on a valuation literature that, being based on hedonic labor market studies of accidental workplace deaths and on contingent valuation studies of reducing accidental death risks, is not necessarily applicable to the population and type of risk reduction appropriate to the case of pollution and mortality.Our study is designed to begin to fill some of the gaps in the mortality risk valuation literature, focusing on the effect of current age and age of life extension on willingness to pay (WTP). In this phase of the work, we are not estimating such relationships. Rather, we are using an unusually explicit contingent valuation instrument, administered in-person with visual aids and a "think aloud" protocol, to help reveal how individuals process and interpret key concepts in valuing mortality risk reductions. These concepts include: small probabilities, tradeoffs, mortality risks, the hazard rate, the rate of time preference, conditional probabilities, and framing. We are also testing a protocol for identifying individuals who demonstrate understanding of some of these concepts. The script is currently being field tested.
The introductory portion of the script opens with questions to practice thinking aloud and making choices involving tradeoffs between money and commodity characteristics. These are followed by questions involving chance that are supplemented with visual aids showing a matrix of squares with one or more squares blackened to indicate the probability of an event occurring. The final introductory questions involve the subject in a choice of living in one of two cities with different death rates for a person of their age and sex. The subject is involved in labeling the visual aid to improve (and test) their understanding of small probabilities.
The heart of the survey is four sets of WTP questions addressing: (i) a reduction in the subject's death rate from their current age to one year later, (ii) an investigation of the effect on WTP of framing the questions in terms of probability of surviving rather than dying, (iii) a series of scope tests of the magnitude of the probabilities, and (iv) a reduction in the chance of dying (surviving) between the subject's 70th and 71st birthday, conditional on survival to 70.
These questions are designed to be abstract, in the sense that the commodity, the payment vehicle, and other particulars are not specified in any detail because we want to give the subject as few cues as possible in an effort to discover how they would interpret these questions on their own. Also, particularly for the very difficult questions in set (iv), we explicitly lead the subject through the conceptual issues involved in determining WTP; i.e., discounting and the chance that the subject will not be alive at age 70. This explicitness is justified because our goal is to understand how people think about these concepts, what heuristics they use to arrive at answers, and what stumbling blocks they encounter.
The next section involves leading the subject through a short conjoint analysis exercise from Krupnick and Cropper (Journal of Risk and Uncertainty, Vol. 5, 1992), where subjects choose to live in one city or another based on death and "chronic bronchitis" risk characteristics of the cities. Through a series of follow-up questions, they are driven to (or closer to) a point of indifference between the cities. We plan to use these questions to determine if subjects are responding to them consistently (see the appendix of the above-referenced article), and then as a measure of whether subjects are understanding small probabilities. The concluding section contains extensive debriefing material to fill in any gaps remaining in the subject's experience with our questions.
Supplemental Keywords:
RFA, Scientific Discipline, Economic, Social, & Behavioral Science Research Program, Health Risk Assessment, decision-making, Social Science, Economics & Decision Making, Psychology, demographic, ecosystem valuation, human welfare, policy analysis, social psychology, surveys, decision analysis, life expectancy, public issues, valuation of mortality, valuing environmental quality, cognitive psychology, environmental values, information dissemination, morbidity risks, preference formation, cost/benefit analysis, environmental ethics, environmental policy, methodological research, mental models, psychological attitudes, public values, social resistance, mortality risks, public policy, stated preference, willingness to payProgress and Final Reports:
Original AbstractThe perspectives, information and conclusions conveyed in research project abstracts, progress reports, final reports, journal abstracts and journal publications convey the viewpoints of the principal investigator and may not represent the views and policies of ORD and EPA. Conclusions drawn by the principal investigators have not been reviewed by the Agency.