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Willingness to Pay for Private and Public Safety: Why the Difference?

Author

Listed:
  • Svensson, Mikael

    (Department of Business, Economics, Statistics and Informatics)

  • Vredin Johansson, Maria

    (Dept of Economics Uppsala University and Swedish National Road and Transport Research Institute)

Abstract

Previous research on the willingness to pay (WTP) for risk reductions has almost systematically found the mean WTP for public risk reductions to be, both economically and statistically, significantly smaller than the mean WTP for private risk reductions. In this paper, we use socio-economic and social-psychological variables to gain insights into this, according to economic theory, anomalous result. Based on the results from a purpose-made survey, we find that part of the discrepancy can be explained by the individuals' age and his/her attitudes towards privately and publicly provided goods in general. Due to differences in attitudes, the public and private goods are in fact perceived as a two different goods, even if the risk reductions are of equal magnitudes. The results therefore suggest that, in cases where the elicited WTP is intended for public policy purposes, the survey context need to be public is consumer sovereignty should reign.

Suggested Citation

  • Svensson, Mikael & Vredin Johansson, Maria, 2007. "Willingness to Pay for Private and Public Safety: Why the Difference?," Working Papers 2007:2, Örebro University, School of Business.
    • Handle: RePEc:hhs:oruesi:2007_002
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    References listed on IDEAS

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    Cited by:

    1. Dorte Gyrd-Hansen, 2013. "Using the Stated Preference Technique for Eliciting Valuations: The Role of the Payment Vehicle," PharmacoEconomics, Springer, vol. 31(10), pages 853-861, October.
    2. Hultkrantz, Lars & Svensson, Mikael, 2010. "The Economic Value of Preventing Fatalities: Recent evidence on the value of a statistical life in Sweden," Working Papers 2010:14, Örebro University, School of Business.
    3. Hultkrantz, Lars & Svensson, Mikael, 2012. "The value of a statistical life in Sweden: A review of the empirical literature," Health Policy, Elsevier, vol. 108(2), pages 302-310.
    4. Kjær, Trine & Nielsen, Jytte Seested, 2016. "An investigation into procedure (in)variance in the valuation of mortality risk reductions," DaCHE discussion papers 2016:4, University of Southern Denmark, Dache - Danish Centre for Health Economics.

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    More about this item

    Keywords

    Contingent Valuation; Private Safety; Public Safety; Attitudes;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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