Estimation of Value of Statistical Life in Shanghai

—Evaluation of Life Cycle Model—

Abstract

This study investigates people's willingness to pay (WTP) for mortality risk reductions in Shanghai, China using contingent valuation surveys. Specially, this study focuses on the relationship of age and WTP for mortality risk reduction. The target risks are air pollution and traffic accidents. Respondents were asked to answer double-bounded dichotomous choice questions for reducing the mortality risk by 30 / 1,000,000 and 60 / 1,00,000 from the baseline risks. The payment vehicles in the risk reduction scenario are medical health check for air pollution risk and safety devices for traffic accident risk.

The surveys were implemented in September 2002 in Shanghai. We collected 640 samples. The estimated values of statistical life (VSLs) are about US$536,000-1,216,000 in the case of air pollution-associated risk and US$898,000-1,853,000 for traffic accident risk.

In our analysis, we found that WTP for associated traffic risk reduction exhibits the “inverted-U” relationship with age, similar with what has been predicted by Shepard and Zeckhauser (1984) as the life cycle model. However, we could not find a relationship between age and WTP for associated air pollution risk.