We estimate the marginal rate of substitution of income for reduction in current annual mortality risk (the “value per statistical life” or VSL) using stated-preference surveys administered to independent samples of the general population of Chengdu China in 2005 and 2016. We evaluate the quality of estimates by the theoretical criterion that WTP for risk reduction should be strictly positive and nearly proportional to the magnitude of the risk reduction (evaluated by comparing answers between respondents). We test the effect of excluding respondents whose answers violate these validity criteria. For subsamples of respondents that satisfy the criteria, point estimates of the sensitivity of WTP to risk reduction are consistent with theory and yield estimates of VSL that are two to three times larger than estimated using the full samples. Between 2005 and 2016, estimated VSL increased sharply, from about 22,000 USD in 2005 to 550,000 USD in 2016. Income also increased substantially over this period. Attributing the change in VSL solely to the change in income implies an income elasticity of about 2.5.
James K. Hammitt, Fangli Geng, Xiaoqi Guo, and Chris P. Nielsen, “Valuing Mortality Risk in China: Comparing Stated-Preference Estimates from 2005 and 2016”, Journal of Risk and Uncertainty, vol. 58, n. 2, June 2019, pp. 167–186.
Journal of Risk and Uncertainty, vol. 58, n. 2, June 2019, pp. 167–186