Risk perception and the value of safety

Journal Article · Tue Dec 01 04:00:00 EST 1992 · Risk Analysis; (United States)

DOI:https://doi.org/10.1111/j.1539-6924.1992.tb00706.x· OSTI ID:7124712

McDaniels, T L ^[1]; Kamlet, M S ^[2]; Fischer, G W ^[3]

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1. Univ. of British Columbia, Vancouver (Canada)
2. Carnegie Mellon Univ., Pittsburgh, PA (United States)
3. Duke Univ., Durham, NC (United States)

This paper examines the relationship between perceived risk and willingness-to-pay (WTP) for increased safety from technological hazards in both conceptual and empirical terms. A conceptual model is developed in which a given household's WTP for risk reductions is a function of traditional socioeconomic variables (i.e., income and base level of risk) and perceived characteristics of the hazards (i.e., dread, knowledge, and exposure). Data to estimate the model are obtained through a combined contingent valuation and risk perception survey that considers 10 technological hazards, five of which are well-defined (e.g., death rates are known and the risks are relatively common) and five are less well-defined. Econometric results, using TOBIT estimation procedures, support the importance of both types of variables in explaining WTP across all 10 hazards. When the risks are split into two groups, the results show that WTP for well-defined hazards is most influenced by perceived personal exposure, while WTP for less well-defined risks is most influenced by levels of dread and severity.

• OSTI ID: 7124712
• Journal Information: Risk Analysis; (United States), Journal Name: Risk Analysis; (United States) Vol. 12:4; ISSN 0272-4332; ISSN RIANDF
• Country of Publication: United States
• Language: English

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