Contingent Valuation, Transport Safety and the Value of Life

Abstract

Contingent Valuation, Transport Safety and the Value of Life, edited by Nathalie G. Schwab Christe and Nils C. Soguel (Kluwer Academic Publishers, 1995). Reviewer: William L. Ferguson, University of Southwestern Louisiana Contingent Valuation, Transport Safety and the Value of Life compiles selected research that was presented to a 1994 multinational conference on the consequences of road accidents hosted by the Institute for Regional and Economic Research (IRER) of the University of Neuchatel, Switzerland. The eight papers in the volume review damage valuation techniques applied to transportation situations across European Union countries. The book's primary focus is the contingent valuation method (CVM), which historically was connected with attempts to value noneconomic environmental goods (e.g., safety, recreation, reduction in exposure to a fatal injury, etc.). Various issues and problem areas associated with this genre of valuation process, as well as empirical evaluations and proposed solutions, are explored. The selected papers generally present different applications and evaluation of basic CVM techniques in traditional transportation settings, and the final paper extends the application of CVM to nontransport health outcomes (e.g., cancer, nerve disease). Essentially, CVM is a three-step process that incorporates survey techniques wherein respondents are presented with hypothetical markets in which estimates are generated of subjects' willingness to pay (WTP) to obtain a given level of (or reduce their exposure to) the environmental good in question, and/or their willingness to accept (WTA) certain monetary compensation to induce them to forego (acquire) some level of the good. Appropriate design of the questionnaire and survey method to be employed (e.g., telephone, mall intercept, mail, etc.) is the initial, and most crucial, step in CVM. The good to be valued, including initial and final states, must be clearly described to reduce/avoid bias (e.g., amenity misspecification bias, symbolic bias, objective versus subjective bias, etc.). How the hypothetical market works (e.g., as a public versus private good) also must be explained clearly to reduce/avoid other important sources of bias (e.g., provision bias, strategic bias, nonresponse bias, protest bias, etc.). The second step involves actual conduct of the survey (e.g., open- versus closed-ended format, bidding game, multistage/follow-up sampling, etc.), in which key details and appropriate procedures must be recognized to reduce/avoid other sources of bias (e.g., interviewer bias, starting point bias, range bias, selection bias, etc.). Due to the hypothetical nature of both the market and good in question, appropriate or at least satisfying tradeoffs may have to be made and evaluated for effect in both steps. The final step, analysis and interpretation of the results, including evaluation of construct validity, also depends upon the relative complexity of the survey. Big picture practical considerations (e.g., reasonable survey length, cost factors, difficulty of subjects to assimilate information, etc.) are given adequate discussion throughout the book. Four papers provide design details and empirical results of CVM studies for auto-related injuries in Switzerland, Denmark, Sweden, and France. Each of these papers highlights positive and negative aspects of the CVM process mentioned above. …