Scandinavian Working Papers in Economics

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

No 2008:8: Willingness to Pay for Car Safety: Sensitivity to Time Framing

Henrik Andersson (), James Hammitt (), Gunnar Lindberg () and Kristian Sundström ()
Additional contact information
Henrik Andersson: VTI, Postal: Dept. of Transport Economics, P.O. Box 55685, SE-102 15 Stockholm, Sweden
James Hammitt: Harvard University, Center for Risk Analysis, Postal: 718 Huntington Avenue, Boston, MA 02115 , USA,
Gunnar Lindberg: VTI, Postal: Dept. of Transport Economics, P.O. Box 55685, SE-102 15 Stockholm, Sweden
Kristian Sundström: Sw Inst for Food and Agric Economics, Postal: Scheelevagen 15 D, 220 07 Lund, SWEDEN

Abstract: Stated preference (SP) surveys attempt to obtain monetary values for non-market goods that reflect individuals' “true”' preferences. Numerous empirical studies suggest that monetary values from SP studies are sensitive to survey design and so may not reflect respondents' true preferences. This study examines the effect of time framing on respondents' willingness to pay (WTP) for car safety. We explore how WTP per unit risk reduction depends on the time period over which respondents pay and face reduced risk. Using data from a Swedish contingent valuation survey, we find that WTP is sensitive to time framing; estimates based on an annual scenario are about 30 to 70 percent higher than estimates from a monthly scenario.

Keywords: Car safety; Contingent valuation; Double bound; Willingness to pay

JEL-codes: C52; D60; I10; Q51

27 pages, July 3, 2008

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Andersson_etal_VSL_Time.pdf PDF-file 

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