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Willingness to Pay for Car Safety: Evidence from Sweden

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Abstract

This study estimates a marginal willingness to pay (WTP) function for a road-mortality risk reduction. Observed marginal WTP from the Swedish car market is used and found to be positively correlated with the baseline risk of the cars. Among owner attributes, we find that income increases marginal WTP, whereas background risk reduces marginal WTP. Also, when comparing the estimated monetary value of a non-marginal risk reduction derived from the integral of the marginal WTP-function with an estimate based on marginal WTP, we find that the estimates are different and that the difference is 15-25 percent for larger estimates, but negligible for smaller risk reductions (which is in line with expectations).

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  • Andersson, Henrik, 2006. "Willingness to Pay for Car Safety: Evidence from Sweden," Working Papers 2006:7, Swedish National Road & Transport Research Institute (VTI).
    • Handle: RePEc:hhs:vtiwps:2006_007
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    Cited by:

    1. Emmanouil Mentzakis & Mandy Ryan & Paul McNamee, 2014. "Modelling Heterogeneity and Uncertainty in Contingent Valuation: an Application to the Valuation of Informal Care," Scottish Journal of Political Economy, Scottish Economic Society, vol. 61(1), pages 1-25, February.
    2. Henrik Andersson & Lina Jonsson & Mikael Ögren, 2010. "Property Prices and Exposure to Multiple Noise Sources: Hedonic Regression with Road and Railway Noise," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 45(1), pages 73-89, January.
    3. Henrik Andersson & Nicolas Treich, 2011. "The Value of a Statistical Life," Chapters, in: André de Palma & Robin Lindsey & Emile Quinet & Roger Vickerman (ed.), A Handbook of Transport Economics, chapter 17, Edward Elgar Publishing.
    4. Haddak, Mohamed Mouloud & Lefèvre, Marie & Havet, Nathalie, 2016. "Willingness-to-pay for road safety improvement," Transportation Research Part A: Policy and Practice, Elsevier, vol. 87(C), pages 1-10.
    5. Henrik Andersson & James Hammitt & Gunnar Lindberg & Kristian Sundström, 2013. "Willingness to Pay and Sensitivity to Time Framing: A Theoretical Analysis and an Application on Car Safety," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 56(3), pages 437-456, November.
    6. James O’Brien, 2018. "Age, autos, and the value of a statistical life," Journal of Risk and Uncertainty, Springer, vol. 57(1), pages 51-79, August.
    7. Tesfaye, Meneyahel Z. & Balana, Bedru B. & Bizimana, Jean-Claude, 2021. "Assessment of smallholder farmers’ demand for and adoption constraints to small-scale irrigation technologies: Evidence from Ethiopia," Agricultural Water Management, Elsevier, vol. 250(C).

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    More about this item

    Keywords

    car safety; hedonic prices; non-marginal willingness to pay; background risk;
    All these keywords.

    JEL classification:

    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy

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