The Impact of Real Options on Willingness to Pay for Mortality Risk Reductions

• Public investments are dynamic in nature, and decision making must account for the uncertainty, irreversibility and potential for future learning. In this paper we adapt the theory for investment under uncertainty for a public referendum setting and perform the first empirical test to show that estimates of the value of a statistical lite (VSL) from stated preference surveys are highly dependent on the inclusion of the option value. Our results indicate an option value of a major economic magnitude. This implies that previously reported VSL estimates, used in societal benefit-cost analysis of health investments, are exaggerated.

Ämnesord

SAMHÄLLSVETENSKAP  -- Ekonomi och näringsliv -- Nationalekonomi (hsv//swe)

SOCIAL SCIENCES  -- Economics and Business -- Economics (hsv//eng)

MEDICIN OCH HÄLSOVETENSKAP  -- Hälsovetenskap -- Hälso- och sjukvårdsorganisation, hälsopolitik och hälsoekonomi (hsv//swe)

MEDICAL AND HEALTH SCIENCES  -- Health Sciences -- Health Care Service and Management, Health Policy and Services and Health Economy (hsv//eng)

Nyckelord

Safety

Fatality

Accident prevention

Cost benefit analysis

Value analysis

Stated preference

Mathematical model

Road: Economics

Road: Economics

Road: Traffic safety and accidents

Road: Traffic safety and accidents

Economics

Economics

Economics

Benefit-cost analysis

Contingent Valuation

Real options

Road safety

Value of a statistical life

Publikations- och innehållstyp

ref (ämneskategori)

art (ämneskategori)