Pricing environmental health risks: survey assessments of risk-risk and risk-dollar trade-offs for chronic bronchitis

Abstract

This study develops a methodology for measuring the values that individuals place on morbidity risk reductions and applies it to the measurement of the benefits from reducing the risks of contracting chronic bronchitis. The survey methodology involves the use of an iterative computer program that presents respondents with a series of pairwise comparisons which are individually designed to measure respondents' marginal rates of substitution for chronic bronchitis risk reduction. The approach is innovative in that it measures the rates of trade-offs for chronic bronchitis risk reduction in terms of the risk of an automobile accident fatality (risk-risk trade-off), as well as in dollars (risk-dollar trade-off). Since it generates estimates for each individual, it can reveal distributions of benefit measures rather than simply a population mean estimate. The resulting rates of trade-off for chronic bronchitis and auto fatality risks suggest that the risk of a chronic bronchitis case is worth 32% of the comparable risk of death, as measured by the median trade-off rate. When risk reduction for chronic bronchitis is compared to a cost of living increase, the median rate of trade-off is $457,000, whereas the comparison between automobile fatality risk reductions and cost of living increases yielded a median rate of trade-off of $2.29 million. The results across different risk-risk and risk-dollar trade-offs were internally consistent.