Individual and household value of mortality reductions with intrahousehold bargaining

2004/2: Strand, J. Department of Economics, University of Oslo and HERO
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This article focuses on individual and two-person household valuation of a public good afftecting mortality. Strand derives alternative measures of maximum willingness to pay (WTP) and value of statistical life (VSL) related to changes in the supply of the public good. It is presumed that both members of the household are inherently selfish, live for at most two periods, and that they strike efficient Nash bargains over consumption of individual and household goods. We then found no systematic bias in letting one household member conduct the (WTP or VSL) valuation on behalf of the household. Public-good VSL may exceed private-good VSL due to each member attaching (purely selfish) preferences to the event that the other member survives or dies, and to a possible net income potential of the other member when surviving in period 2. When period 2 is a retirement period and household members' incomes are then fixed, interview surveys tend to overvalue VSL due to ignored negative effects of own survival on government pension budgets.

ISBN: 82-7756-134-2
Publisert 25. mai 2011 16:22 - Sist endret 27. sep. 2011 15:52