Working Papers,
Swedish National Road & Transport Research Institute (VTI)

Abstract: This study estimates a marginal willingness to pay (WTP) function for a road-mortality risk reduction. Observed marginal WTP from the Swedish car market is used and found to be positively correlated with the baseline risk of the cars. Among owner attributes, we find that income increases marginal WTP, whereas background risk reduces marginal WTP. Also, when comparing the estimated monetary value of a non-marginal risk reduction derived from the integral of the marginal WTP-function with an estimate based on marginal WTP, we find that the estimates are different and that the difference is 15-25 percent for larger estimates, but negligible for smaller risk reductions (which is in line with expectations).

Keywords: car safety; hedonic prices; non-marginal willingness to pay; background risk

JEL-codes: C51; D61; J28

22 pages, September 20, 2006

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Published as

Henrik Andersson, (2008), 'Willingness to Pay for Car Safety: Evidence from Sweden', Environmental and Resource Economics, vol 41, no 4, pages 579-594

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