Abstract: |
Economic analyses of development projects and policies often involve assigning
an economic value to changes in the risk of loss of human life. A typical term
used in the economic analyses is the value of statistical life, which reflects
the aggregation of individuals'willingness to pay for fatal risk reduction and
therefore the economic value to society to reduce the statistical incidence of
premature death in the population by one. Studies on the value of a
statistical life have been extensively conducted in the developed world;
however, few such studies can be found for developing countries. This paper
presents a study that estimates individuals'willingness to pay for cancer risk
prevention in three provinces of China. The results imply that the mean value
of willingness to pay for a cancer vaccine that is effective for one year is
759 yuan, with a much lower median value of 171 yuan. The estimated income
elasticity of willingness to pay is 0.42. Using data on the incidence of
cancer illness and death in the population, these willingness to pay figures
imply that the marginal value of reducing the anticipated incidence of cancer
mortality by one in the population is 73,000 yuan and an average value of
795,000 yuan, which are about six and 60 times average household annual
income, respectively. The big difference between the marginal value and the
average value of fatal risk reduction corresponds to a very low estimated
elasticity of willingness to pay with respect to fatal risk reduction. This
finding challenges the validity of previous studies of the value of a
statistical life, which are mostly based on average willingness-to-pay values
of mortality risk reduction. |