Discussion Paper

Age, Health, and the Willingness to Pay for Mortality Risk Reductions: A Contingent Valuation Survey in Japan

Aug 23, 2005 | Kenshi Itaoka, Alan J. Krupnick, Makoto Akai, Anna Alberini, Maureen L. Cropper, Nathalie B. Simon

Abstract

A contingent valuation survey was conducted in Sizuoka, Japan, to estimate the willingness to pay (WTP) for reductions in the risk of dying and calculate the value of statistical life (VSL) for use in environmental policy in Japan. Special attention was devoted to the effects of age and health characteristics on WTP. We find that the VSLs are somewhat lower (103 to 344 million yen) than those found in the virtually identical survey applied in some developed countries. These values were subject to a variety of validity tests, which they generally passed. We find that the WTP for those over age 70 is lower than that for younger adults, but that this effect is eliminated in multiple regression. Rather, when accounting for other covariates, we find that WTP generally increases with age throughout the ages in our sample (age 40 and over). The effect of health status on WTP is mixed, with WTP of those with cancer being lower than that of healthy respondents while the WTP of those with heart disease is greater. The VSLs for future risk changes are lower than those for contemporaneous risk reductions. The implicit discount rates of 5.8–8.0% are relatively larger than the discount rate regularly used in environment policy analyses. This first-of-its-kind survey in Japan provides information directly useful for estimating the benefits of environmental and other policies that lower mortality risks to the general population and sub-groups with a variety of specific traits.