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The Price of Safety

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  • Boulding, William
  • Purohit, Devavrat

Abstract

This article presents a simple economic model to assess consumers' valuation of safety features. In particular, we model the benefit from safety as the reduction in the probability of death and the associated economic value of this reduction. We then apply this theoretical model to investigate market valuation of antilock brakes and airbags via the specification and estimation of a hedonic price equation. Results indicate that consumers behave in a manner consistent with the economic model we develop. Copyright 1996 by the University of Chicago.

Suggested Citation

  • Boulding, William & Purohit, Devavrat, 1996. "The Price of Safety," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 23(1), pages 12-25, June.
    • Handle: RePEc:oup:jconrs:v:23:y:1996:i:1:p:12-25
    DOI: 10.1086/209463
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    Cited by:

    1. Korenok, Oleg & Hoffer, George E. & Millner, Edward L., 2010. "Non-price determinants of automotive demand: Restyling matters most," Journal of Business Research, Elsevier, vol. 63(12), pages 1282-1289, December.
    2. Koen Pauwels & Richard D’Aveni, 2016. "The formation, evolution and replacement of price–quality relationships," Journal of the Academy of Marketing Science, Springer, vol. 44(1), pages 46-65, January.

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