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Dread and Risk Elimination Premium for the Value of a Statistical Life

Author

Listed:
  • Olofsson , Sara

    (The Swedish Institute for Health Economics (IHE))

  • Gerdtham, Ulf-G.

    (Department of Economics, Lund University)

  • Hultkrantz, Lars

    (Örebro University, School of Business)

  • Persson, Ulf

    (The Swedish Institute for Health Economics (IHE))

Abstract

The Value of a Statistical Life (VSL) is a widely used measure of the value of mortality risk reduction. Since VSL should reflect preferences and attitudes to risk, there are reasons to believe that it varies depending on the type of risk involved. It has been argued that cancer should be considered a “dread disease”, which supports the use of a “cancer premium”. The objective of this study is to elicit the existence and size of a cancer premium (for pancreatic cancer and multiple myeloma) in relation to road traffic accidents, sudden cardiac arrest and Amyotrophic Lateral Sclerosis (ALS). Data was collected from 500 individuals in the Swedish general population 50 -74 years old using a web-based questionnaire. Preferences were elicited using the Contingent Valuation method, and a split-sample design was applied to test for scale sensitivity. VSL differs significantly between contexts, being highest for ALS and lowest for road traffic accident. A premium (26-76 %) for cancer was found in relation to road traffic accidents, but not in relation to ALS and sudden cardiac arrest. The premium was higher for cancer with a shorter time from diagnosis to death. Eliminating risk was associated with a premium of around 17 %. Evidence of scale sensitivity was found when comparing WTP for all risks simultaneously. This study shows that there exist a dread premium and risk elimination premium. These factors should be considered when searching for an appropriate value for economic evaluation and health technology assessment.

Suggested Citation

  • Olofsson , Sara & Gerdtham, Ulf-G. & Hultkrantz, Lars & Persson, Ulf, 2016. "Dread and Risk Elimination Premium for the Value of a Statistical Life," Working Papers 2016:22, Lund University, Department of Economics.
    • Handle: RePEc:hhs:lunewp:2016_022
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    Cited by:

    1. Barrientos, Manuel & Lavin, Felipe Vasquez & Ponce Oliva, Roberto D., 2020. "Assessing the Incorporation of Latent Variables in the Estimation of the Value of a Statistical Life," EfD Discussion Paper 20-22, Environment for Development, University of Gothenburg.
    2. S. Olofsson & U.-G. Gerdtham & L. Hultkrantz & U. Persson, 2019. "Value of a QALY and VSI estimated with the chained approach," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(7), pages 1063-1077, September.
    3. Vimefall Elin & Persson Mattias & Olofsson Sara & Hultkrantz Lars, 2022. "Is prevention of suicide worth less? A comparison of the value per statistical life," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 23(2), pages 261-275, March.
    4. Anna Alberini & Milan Ščasný, 2021. "On the validity of the estimates of the VSL from contingent valuation: Evidence from the Czech Republic," Journal of Risk and Uncertainty, Springer, vol. 62(1), pages 55-87, February.
    5. Grisolía, José M. & Longo, Alberto & Hutchinson, George & Kee, Frank, 2018. "Comparing mortality risk reduction, life expectancy gains, and probability of achieving full life span, as alternatives for presenting CVD mortality risk reduction: A discrete choice study of framing ," Social Science & Medicine, Elsevier, vol. 211(C), pages 164-174.
    6. Olofsson, Sara & Gerdtham , Ulf-G & Hultkrantz , Lars & Persson , Ulf, 2016. "Chained Approach vs Contingent Valuation for Estimating the Value of Risk Reduction," Working Papers 2016:34, Lund University, Department of Economics.

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    More about this item

    Keywords

    willingness to pay; value of a statistical life; cancer; contingent valuation; risk elimination;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • J17 - Labor and Demographic Economics - - Demographic Economics - - - Value of Life; Foregone Income

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