Scandinavian Working Papers in Economics
HERO Online Working Paper Series,
University of Oslo, Health Economics Research Programme
No 2004:2: Individual and household value of mortality reductions with intrahousehold bargaining
Jon Strand (jon.strand@econ.uio.no)
Additional contact information
Jon Strand: Department of Economics, Postal: University of Oslo, P.O. Box 1095 Blindern, N-0317 Oslo
Abstract: I derive alternative measures of maximum willingness to pay (WTP) and value of statistical life (VSL) related to changes in the supply of a public good affecting mortality for both members of two-person households, when members are selfish, live for at most two periods, and strike efficient Nash bargains over consumption of individual and household goods. I find no systematic bias in letting one household member conduct the (WTP or VSL) valuation on behalf of the household. Publicgood VSL may exceed private-good VSL due to each member attaching (purely selfish) preferences to the event that the other member survives or dies, and to a possible net income potential of the other member when surviving in period 2. When period 2 is a retirement period and household members’ incomes are then fixed, interview surveys tend to overvalue VSL due to ignored negative effects of own survival on government pension budgets.
Keywords: Value of statistical life; household bargaining; intertemporal allocation models; optimal life insurance
JEL-codes: I18
32 pages, June 14, 2009
Full text files
HERO2004_2.pdf
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