Journal of Risk and Uncertainty

, Volume 23, Issue 2, pp 165–184 | Cite as

Valuing Mortality-Risk Reduction: Using Visual Aids to Improve the Validity of Contingent Valuation

  • Phaedra S. Corso
  • James K. Hammitt
  • John D. Graham


We investigate the validity of contingent valuation (CV) estimates of the value per statistical life (VSL). We test for sensitivity of estimated willingness to pay (WTP) to the magnitude of mortality-risk reduction and for the theoretically predicted proportionality of WTP to risk reduction using alternative visual aids to communicate risk. We find that WTP is sensitive to the magnitude of risk reduction for independent subsamples of respondents presented with each of three alternative visual aids, but not for the subsample presented with no visual aid. Estimated WTP is consistent with proportionality to risk reduction for the subsamples presented with a logarithmic scale or an array of 25,000 dots, but not for the subsample receiving a linear scale. These results suggest that CV can provide valid estimates of WTP for mortality-risk reduction if appropriate methods are used to communicate the risk change to respondents.

contingent valuation VSL WTP sensitivity to scope risk communication risk ladder 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Alberini, A. (1995). “Efficiency vs Bias of Willingness-to-Pay Estimates: Bivariate and Interval-Data Models,” Journal of Environmental Economics and Management 29, 169–180.Google Scholar
  2. Alberini, A., B. Kanninen, and R. T. Carson. (1997). “Modeling Response Incentive Effects in Dichotomous Choice Contingent Valuation Data,” Land Economics 73, 309–324.Google Scholar
  3. Baron, J. (1997a). “Biases in Quantitative Measurement of Values for Public Decisions,” Psychological Bulletin 122, 72–88.Google Scholar
  4. Baron, J. (1997b). “Confusion of Relative and Absolute Risk in Valuation,” Journal of Risk and Uncertainty 14, 301–309.Google Scholar
  5. Beattie, J., J. Covey, P. Dolan, L. Hopkins, M. Jones-Lee, G. Loomes, N. Pidgeon, A. Robinson, and A. Spencer. (1998). “On the Contingent Valuation of Safety and the Safety of Contingent Valuation: Part 1—Caveat Investigator,” Journal of Risk and Uncertainty 17, 5–25.Google Scholar
  6. Calman, K. C. and G. H. D. Royston. (1997). “Risk Language and Dialects,” British Medical Journal 315, 939–942.Google Scholar
  7. Cameron, T. A. and J. Quiggin. (1994), “Estimation Using Contingent Valuation Data from a ‘Dichotomous Choice with Follow-Up’ Questionnaire,” Journal of Environmenta1 Economics and Management 27, 219–234.Google Scholar
  8. Desvousges, W. H., R. F. Johnson, and R. W. Dunford, (1993). “Measuring Natural Resource Damages with Contingent Valuation: Tests of Validity and Reliability.” In J. A. Hausman (ed.), Contingent Valuation: A Critical Assessment, pp. 91–164, North-Holland, Amsterdam.Google Scholar
  9. Diamond, P. A. and J. A. Hausman. (1994). “Contingent Valuation: Is Some Number Better Than No Number?” Journal of Economic Perspectives 8(4), 45–64.Google Scholar
  10. Eom, Y. S. (1994). “Pesticide Residue Risk and Food Safety Valuation: A Random Utility Approach,” American Journal of Agricultural Economics 76, 760–771.Google Scholar
  11. Featherstonhaugh, D., P. Slovic, S. M. Johnson, and J. Friedrich. (1997). “Insensitivity to the Value of Human Life: A Study of Psychological Numbing,” Journal of Risk and Uncertainty 14, 283–300.Google Scholar
  12. Fischhoff, B. and L. Furby. (1988). “Measuring Values: A Conceptual Framework for Interpreting Transactions with Special Reference to Contingent Valuation of Visibility,” Journal of Risk and Uncertainty 1, 147–184.Google Scholar
  13. Fisher, A., L. G. Chestnut, and D. M. Violette. (1989a). “The Value of Reducing Risks of Death: A Note on New Evidence,” Journal of Policy Analysis and Management 8, 88–100.Google Scholar
  14. Fisher, A., G. H. McClelland, and W. D. Schulze. (1989b). “Communicating Risk Under Title III of SARA: Strategies for Explaining Very Small Risks in a Community Context,” Journal of the Air Pollution Control Association 39, 271–276.Google Scholar
  15. Frederick, S. and B. Fischhoff. (1998). “Scope (In)Sensitivity in Elicited Valuations,” Risk Decision and Policy 3, 109–124.Google Scholar
  16. Gigerenzer, G. (1995). “How to Improve Bayesian Reasoning without Instruction: Frequency Formats,” Psychological Review 102, 684–704.Google Scholar
  17. Gigerenzer, G. (1996). “The Psychology of Good Judgement: Frequency Formats and Simple Algorithms,” Medical Decision Making 16, 273–280.Google Scholar
  18. Gomez, U. A. L. (1990). “Communicating Very Low Probability Events,” unpublished dissertation, Carnegie Mellon University.Google Scholar
  19. Hammitt, J. K. (1986). Estimating Consumer Willingness to Pay to Reduce Food-Borne Risk, R-3447-EPA, Santa Monica, CA: RAND Corporation.Google Scholar
  20. Hammitt, J. K. (1990). “Risk Perceptions and Food Choice: An Exploratory Analysis of Organic-Versus Conventional-Produce Buyers,” Risk Analysis 10, 367–374.Google Scholar
  21. Hammitt, J. K. (2000a). “Evaluating Contingent Valuation of Environmental Health Risks: The Proportionality Test,” Association of Environmental and Resource Economists Newsletter, May.Google Scholar
  22. Hammitt, J. K. (2000b). “Valuing Mortality Risk: Theory and Practice,” Environmental Science and Technology 34, 1396–1400.Google Scholar
  23. Hammitt, J. K. and J. D. Graham. (1999). “Willingness to Pay for Health Protection: Inadequate Sensitivity to Probability?” Journal of Risk and Uncertainty 18, 33–62.Google Scholar
  24. Hanemann, M., J. Loomis, and B. Kanninen. (1991). “Statistical Efficiency of Double-Bounded Dichotomous Choice Contingent Valuation,” American Journal of Agricultural Economics 73, 1255–1261.Google Scholar
  25. Hsee, C. K. (1996). “The Evaluability Hypothesis: An Explanation for Preference Reversals between Joint and Separate Evaluations of Alternatives,” Organizational Behavior and Human Decision Processes 67, 247–257.Google Scholar
  26. Johannesson, M., B. Jonsson, and L. Borgquist. (1991). “Willingness to Pay for Antihypertensive Therapy— Results of a Swedish Pilot Study.” Journal of Health Economics 10, 461–473.Google Scholar
  27. Johannesson, M., P.-O. Johansson, B. Kristom, and U.-G. Gerdtham. (1993). “Willingness to Pay for Antihypertensive Therapy—Further Results,” Journal of Health Economics 12, 95–108.Google Scholar
  28. Jones-Lee, M. W. (1974). “The Value of Changes in the Probability of Death or Injury,” Journal of Political Economy 82, 835–849.Google Scholar
  29. Jones-Lee, M. W., M. Hammerton, and P. R. Philips. (1985). “The Value of Safety: Results of a National Survey,” Economic Journal 95, 49–72.Google Scholar
  30. Jones-Lee, M. W., G. Loomes, and P. R. Philips. (1995). “Valuing the Prevention of Non-fatal Road Injuries: Contingent Valuation vs. Standard Gambles,” Oxford Economic Papers 47, 676–695.Google Scholar
  31. Kahneman, D. and A. Tversky. (1979). “Prospect Theory: An Analysis of Decision Under Risk,” Econometrica 47, 263–291.Google Scholar
  32. Kahneman, D., I. Ritov, and D. Schkade. (1999). “Economic Preferences or Attitude Expression?: An Analysis of Dollar Responses to Public Issues,” Journal of Risk and Uncertainty 19, 203–235.Google Scholar
  33. Kanninen, B. J. (1995). “Bias in Discrete Response Contingent Valuation,” Journal of Environmental Economics and Management 28, 114–125.Google Scholar
  34. Kaplan, R. M., B. Hammel, and L. E. Schimmel. (1985). “Patient Information Processing and the Decision to Accept Treatment,” Journal of Social Behavior and Personality 1, 113–120.Google Scholar
  35. Kartman, B., F. Andersson, and M. Johannesson. (1996). “Willingness to Pay for Reductions in Angina Pectoris Attacks,” Medical Decision Making 16, 248–253.Google Scholar
  36. Kidholm, K. (1995). “Assessing the Value of Traffic Safety Using the Contingent Valuation Technique: The Danish Survey,” In C. N. Schwab and N. Soguel (eds.), Contingent Valuation, Transport Safety, and the Value of Life, pp. 45–61, Dordrecht: Kluwer Academic Publishers.Google Scholar
  37. Kunreuther, H., R. Ginsberg, L. Miller, P. Sagi, P. Slovic, B. Borkan, and N. Katz. (1978). Disaster Insurance Protection: Public Policy Lessons. New York: John Wiley and Sons.Google Scholar
  38. Li, C.-Z. and L. Mattson. (1995). “Discrete Choice under Preference Uncertainty: An improved Structural Model for Contingent Valuation,” Journal of Environmental Economics and Management 28, 256–269.Google Scholar
  39. Lin, C.-T. J. and J. W. Milon. (1995). “Contingent Valuation of Health Risk Reductions for Shellfish Products,” In J. A. Caswell (ed.), Valuing Food Safety and Nutrition, pp. 83–114. Boulder, CO: Westview Press.Google Scholar
  40. Liu, J.-T., J. K. Hammitt, and J.-L., Liu. (1997). “Estimated Hedonic Wage Function and Value of Life in a Developing Country,” Economic Letters 57, 353–358.Google Scholar
  41. Loomis, J. B. and P. H. duVair. (1993). “Evaluating the Effect of Alternative Risk Communication Devices on Willingness to Pay: Results from a Dichotomous Choice Contingent Valuation Experiment.” Land Economics 69, 287–298.Google Scholar
  42. Machina, M. J. (1987). “Choice under Uncertainty: Problems Solved and Unsolved,” Journal of Economic Perspectives 1, 121–154.Google Scholar
  43. Mitchell, R. C. and R. T. Carson. (1986). “Valuing Drinking Water Risk Reductions Using the Contingent Valuation Method: A Methodological Study of Risks from THM and Giardia.” Draft Report to the U.S. Environmental Protection Agency, Washington, DC.Google Scholar
  44. Mitchell, R. C. and R. T. Carson. (1989). Using Surveys to Value Public Goods: The Contingent Valuation Method. Washington, DC: Resources for the Future.Google Scholar
  45. Moschandreas, D. J. and P. E. Chang. (1994). “On the Use of a Risk Ladder: Linking Public Perception of Risks Associated with Indoor Air with Cognitive Elements and Attitudes Toward Risk Reduction,” Atmospheric Environment 28, 3093–3098.Google Scholar
  46. Muller, A. and T. J. Reutzel. (1984). “Willingness to Pay for Reduction in Fatality Risk: An Exploratory Survey,” American Journal of Public Health 74, 808–812.Google Scholar
  47. National Oceanic and Atmospheric Administration. (1994), “Natural Resource Damage Assessments: Proposed Rules,” Federal Register 59, 1062–1191.Google Scholar
  48. Pratt, J. W. and R. J. Zeckhauser. (1996). “Willingness to Pay and the Distribution of Risk and Wealth,” Journal of Political Economy 104, 747–763.Google Scholar
  49. Quiggin, J. (1982). “A Theory of Anticipated Utility,” Journal of Economic Behavior and Organization 3, 323–343.Google Scholar
  50. Ready, R. C., J. C. Whitehead, and G. C. Blomquist. (1995). “Contingent Valuation when Respondents are Ambivalent,” Journal of Environmental Economics and Management 29, 181–196.Google Scholar
  51. Sandman, P. M., N. D. Weinstein, and P. Miller. (1994). “High Risk or Low: How Location on a ‘Risk Ladder’ Affects Perceived Risk,” Risk Analysis 14, 35–45.Google Scholar
  52. Smith, V. K. and W. H. Desvousges. (1987). “An Empirical Analysis of the Economic Value of Risk Changes,” Journal of Political Economy 95, 89–114.Google Scholar
  53. Tversky, A. and D. Kahneman. (1992). “Advances in Prospect Theory: Cumulative Representation of Uncertainty,” Journal of Risk and Uncertainty 5, 297–323.Google Scholar
  54. Viscusi, W. K. (1985). “A Bayesian Perspective on Biases in Risk Perception,” Economic Letters 17, 59–62.Google Scholar
  55. Viscusi, W. K., W. Magat, and J. Huber. (1987). “An Investigation of the Rationality of Consumer Valuations of Multiple Health Risk,” RAND Journal of Economics 18, 465–479.Google Scholar
  56. Viscusi, W. K. (1989). “Prospective Reference Theory: Toward an Explanation of the Paradoxes,” Journal of Risk and Uncertainty 2, 235–263.Google Scholar
  57. Viscusi, W. K. (1993). “The Value of Risks to Life and Health.” Journal of Economic Literature 31, 1912–1946.Google Scholar
  58. Viscusi, W. K. (1998). Rational Risk Policy. Oxford University Press, Oxford, UK.Google Scholar
  59. Weinstein, M. C., D. S. Shepard, and J. S. Pliskin. (1980). “The Economic Value of Changing Mortality Probabilities: A Decision-Theoretic Approach,” Quarterly Journal of Economics 94, 373–396.Google Scholar
  60. Weinstein, N. D., P. M. Sandman, and W. K. Hallman. (1994). “Testing a Visual Display to Explain Small Probabilities,” Risk Analysis 14, 895–108.Google Scholar

Copyright information

© Kluwer Academic Publishers 2001

Authors and Affiliations

  • Phaedra S. Corso
    • 1
  • James K. Hammitt
    • 2
  • John D. Graham
    • 2
  1. 1.Centers for Disease Control and PreventionEpidemiology Program OfficeAtlanta
  2. 2.Center for Risk AnalysisHarvard School of Public HealthBoston

Personalised recommendations