Valuing self‐protection: income and certification effects for safe rooms

Abstract

Survey data from Tulsa, Oklahoma residents are used to examine individual valuations of safe rooms. The study utilises two measures of individual valuations, the maximum willingness to pay (WTP) and willingness to accept (WTA) for safe rooms. The primary research questions are concerned with whether the willingness to pay measure exhibits income effects and whether certification standards make the safe room investment more desirable. The main findings can be summarised as follows. The mean willingness to pay for a safe room was $2,500. The value of certification by a national organisation increased willingness to pay for the safe room by $600 on average. There is no direct income effect in that respondents' stated willingness to pay does not bear a statistically significant relationship to reported income. There is evidence of a secondary income effect in that willingness to pay elicited from attendees of a suburban parade of homes was $731 higher than attendees of an urban parade of homes. A mortgage payment‐based WTA measure yields mean valuations of the safe room more than three times higher than the lump sum WTP valuation.