On the Contingent Valuation of Safety and the Safety of Contingent Valuation: Part 1-Caveat Investigator

This article reports the results of two studies aimed at testing and refining a procedure for estimating willingness-to-pay based monetary values of safety using the contingent valuation method. In spite of the fact that respondents were given the opportunity to discuss various safety issues and key concepts in focus group meetings held in advance of individual interviews, and were also given ample opportunity to revise their responses in the light of the overall pattern of these responses, the results show clear evidence of extensive and persistent insensitivity to the scale and scope of the safety improvements that were specified in the contingent valuation questions, as well as vulnerability to framing effects. This clearly casts serious doubt on the reliability and validity of willingness-to-pay based monetary values of safety estimated using conventional contingent valuation procedures.     

Reference points,loss aversion,and contingent values for auto safety

This article is concerned with the possible role of reference points and loss aversion (as suggested by prospect theory) in subjects' judgments about the value of increments and decrements in automobile safety. The contingent valuation method is employed in two experiments, both of which consider subjects' willingness-to-pay (WTP) for increased safety and compensation demanded (CD) for decreased safety in hypothetical new vehicle purchases. The results establish that disparities exist in subjects' WTP and CD values for the same increment of auto safety, even for a close-to-market context such as hypothetical new vehicle purchases. The results also indicate that evaluations can be manipulated by changing the perception of the reference point: losses can be recast as forgone gains and forgone gains as losses, altering (or even eliminating) differences between WTP and CD values.I would like to thank Mark Kamlet, Greg Fischer, and Granger Morgan for advice and help in structuring the research for the first experiment; Paul Slovic and Jack Knetsch for suggestions regarding the structure and content of the second experiment; Robin Gregory and two anonymous referees for insightful comments on earlier drafts; and the subjects who provided their time in the two experiments. Michael McNickle provided able research assistance for the second experiment. The survey for the first experiment was partially supported by the Program for Technology and Society at Carnegie Mellon University, with funds from the Andrew W. Mellon Foundation.     

The valuation of contingent claims markets

This article studies an agent's valuation of the right to trade in a complete contingent claims market. The proposed measure generalizes the Pratt (1964) risk premium, which captures the willingness to pay to replace a given risky wealth prospect with an actuarially equivalent, nonrisky wealth. Specifically, we define ageneralized risk premium to be the willingness to pay to trade at going market prices. If state prices are actuarially fair, the Pratt premium is obtained as a special case. We derive several properties of this generalized premium and note its relationship to the option price of a public project under uncertainty.     

Scale and context effects in the valuation of transport safety

How can willingness-to-pay-based values of safety for public transport modes, such as London's Underground railway system, be expected to relate to the corresponding value for road safety? This article reports results which suggest that such values should be set at a substantial premium in relation to their roads counterpart. However, this premium appears to derive entirely from considerations of control, voluntariness, and responsibility, and, contrary to popular wisdom, apparently owesnothing whatsoever to the possibility of large-scale “catastrophic” accidents on modes such as the Underground.     

On the Contingent Valuation of Safety and the Safety of Contingent Valuation: Part 2 - The CV/SG "Chained" Approach

This article reports the results of a study aimed at estimating a willingness-to-pay based value of statistical life for road risks using a multi-stage approach which involves "chaining together" responses to contingent valuation and standard gamble questions.The rationale for employing a multi-stage approach is to break the wealth/risk of death trade-off down into a number of conceptually manageable steps, thereby trying to attenuate the various biases that appear to be pervasive in responses to more direct contingent valuation questions in the health and safety field.     

Embedding effects: Stimulus representation and response mode

Thecontingent valuation (CV) methodology assigns prices to environmental amenities by asking people how much they would be willing to pay in order to preserve or acquire those amenities. If this measurement procedure is valid, then responses should be sensitive to relevant changes in the amenities being judged and insensitive to irrelevant changes. One apparent demonstration of inappropriate insensitivity is theembedding effect: the observation that people are apparently willing to pay the same amount of money for a good as for a minor subset of that good. This study examined the possibility that the source of this effect lies with each of two (potentially treatable) methodological problems: 1) subjects have difficulty using quantitative (dollar) response modes to express their values; and 2) subjects have difficulty absorbing the essential details of the CV scenarios describing those goods. The study found that 1) subjects showed considerable embedding both with a simple paired-comparison response mode and with a more demanding one requiring direct dollar estimates; 2) embedding was much reduced with the simpler response mode; 3) subjects' preferences with the two response modes were usually inconsistent; 4) when asked to describe the CV scenario that they had just heard, subjects often reported key task details inaccurately; and 5) there was less embedding when tasks were reinterpreted in terms of the questions subjects reported having answered (as opposed to what had actually been asked). These results are discussed in terms of the match between the questions that investigators would like to ask and the ones that subjects are capable of answering.     

Valuing future cash flows with non separable discount factors and non additive subjective measures: conditional Choquet capacities on time and on uncertainty

We consider future cash flows that are contingent both on dates in time and on uncertain states. The decision maker (DM) values the cash flows according to its decision criterion: Here, the payoffs’ expectation with respect to a capacity measure. The subjective measure grasps the DM’s behaviour in front of the future, in the spirit of de Finetti’s (1930) and of Yaari’s (1987) Dual Theory in the case of risk. Decomposition of the criterion into two criteria that represent the DM’s preferences on uncertain payoffs and time contingent payoffs are derived from Ghirardato’s (1997) results. Conditional Choquet integrals are defined by dynamic consistency (DC) requirements and conditional capacities are derived, under some conditions on information. In contrast with other models referring to DC, ours does not collapse into a linear one because it violates a weak version of consequentialism.     

The Value of a Statistical Life in Transport: Findings from a New Contingent Valuation Study in Sweden

This article presents the results of a contingent valuation study from Sweden aimed at estimating the value of a statistical life (VOSL) in road traffic safety. Data on respondents' own subjective risk was collected by use of visual aids presented in a mail questionnaire. The relationship between willingness-to-pay (WTP) and absolute risk reduction was estimated by using a non-linear, least absolute deviation estimation method. This study generated an income-adjusted VOSL of SEK22.3 million (US$2.6 million). Analysis of WTP's sensitivity to probability variation indicates that in future studies, valuing risk reductions in road traffic, the magnitude of absolute risk and relative risk reductions to consider should be in perceptible range. On addition it should also be possible for respondents to compare the magnitudes of different risk reductions.     

Private Passions, the Public Good and Public Service Reform

There has been considerable recent discussion of the impact of public service reforms on the work ethics and motivations of public service workers. In this article we draw upon recent research on the ethical dilemmas facing regeneration workers in order to look more closely at the role of values in the working lives of public service professionals. Focusing on the commitment to social justice, we argue that such values find expression in two interlinked ways, as something workers have and as a process of giving value to different goods. Our research reveals that while both aspects of values are rooted in people's life experiences the second dimension is more contingent and relational. While public service reforms appear to have less impact upon workers’ pregiven values, they can and do have an impact on the way in which these values find expression in attachment to different goods. To understand the effect of such reform processes on workers’ motivations we therefore need a more complex conceptual framework than that provided by either simple public sector ethos/private sector ethos distinctions or by models of economic individualism offered by writers such as Julian Le Grand.     

Imprecise preferences and the WTP-WTA disparity

This article reports the results of a study designed to elicit willingness to pay (WTP) and willingness to accept (WTA) values for changes in the risk of nonfatal road injuries. We examine the possibility that individuals' preferences over combinations of wealth, risk, and safety are imprecise, and that this imprecision might result in the observed disparity between WTP and WTA measures of value. The results confirm that individuals' preferences for safety are significantly imprecise, but that this alone is insufficient to explain more than part of the disparity. Indeed, respondents' estimates of the minimum that they would be prepared to accept for a risk increase frequently exceed the maximum that they would be prepared to pay for an equivalent risk reduction.     

Indirect methods for valuing changes in environmental risks with nonexpected utility preferences

Theoretical models for estimating individuals' values for sure improvements in environmental quality are well developed. These models can be classified as being based on averting behavior, hedonic prices, or weak complementarity. Some of these models have also been applied to the task of valuing changes in risk based on expected utility theory. This article provides a systematic development of these models for changes in either the probability or the magnitude of an uncertain event and shows that the derived expressions for individual marginal willingness to pay can be generalized to nonexpected utility preferences as long as the index of preferences is continuous, convex, and twice differentiable.     

The Link Between Voter Choice and Religious Identity in Contemporary Society: Bringing Classical Theory Back In*

Objectives. In this article, we analyze voter choice data from six U.S. presidential elections for evidence of religious identity and sociodemographic effects on voter choice. Methods. Voter choice is analyzed over the period 1980 to 2000 with multivariate statistical models. Results. A link is found between voter choice and religious identity, where the effect of religious identity on voter choice is contingent on location within the stratification order defined by race, class, and gender. The article proposes a theory to explain the contingent link between voter choice and religious identity; the theory is derived from classical sociology. Conclusion. In the United States, political behavior related to religious identity is contingent on the individual's location within the stratification order.     

Under the Influence: The Interplay among Industry,Publishing, and Drug Regulation

The relationships among academe, publishing, and industry can facilitate commercial bias in how drug efficacy and safety data are obtained, interpreted, and presented to regulatory bodies and prescribers. Through a critique of published and unpublished trials submitted to the Food and Drug Administration (FDA) and the European Medicines Agency (EMA) for approval of a new antidepressant, vortioxetine, we present a case study of the “ghost management” of the information delivery process. We argue that currently accepted practices undermine regulatory safeguards aimed at protecting the public from unsafe or ineffective medicines. The economies of influence that may intentionally and unintentionally produce evidence-biased—rather than evidence-based—medicine are identified. This is not a simple story of author financial conflicts of interest, but rather a complex tale of ghost management of the entire process of bringing a drug to market. This case study shows how weak regulatory policies allow for design choices and reporting strategies that can make marginal products look novel, more effective, and safer than they are, and how the selective and imbalanced reporting of clinical trial data in medical journals results in the marketing of expensive “me-too” drugs with questionable risk/benefit profiles. We offer solutions for neutralizing these economies of influence.     

Measuring values: A conceptual framework for interpreting transactions with special reference to contingent valuation of visibility

People express their value for a good when they pay something for it. Interpretinggood andpayment very broadly, we offer a general analytical framework for characterizing such transactions. This framework is suitable for interpreting actual transactions as well as for creating hypothetical transactions for research purposes. It is described here both in general terms and with special application to one particular kind of transaction, contingent valuation studies in which individuals estimate the value of possible changes in atmospheric visibility. In these transactions, as in many others, risk (of undesired changes in visibility) is one principal feature; at least some uncertainty often surrounds other transaction features as well (For example: How much will visibility really change if I promise to pay for it? Will I really have to pay?). The framework presented here conceptualizes any transaction as involving (a) a good, (b) a payment, and (c) a social context within which the transaction is conducted. Each of these aspects in turn has a variety of features that might and in some cases should affect evaluations. For each such feature, the framework considers first the meaning of alternative specifications and then the difficulties of ensuring that they are understood and evaluated properly. As a whole, the framework provides an integrated approach to designing evaluation studies and interpreting their results.     

Interpersonal comparisons of utility in bargaining: evidence from a transcontinental ultimatum game

This article presents the experimental results of a “Transcontinental Ultimatum Game” implemented between India and France. We use a standard ultimatum game, but in one treatment, Indian subjects made offers to French subjects (ItoF treatment) and, in another treatment, French subjects made offers to Indian subjects (FtoI treatment). We observed that FtoI treatment bargaining mostly ended up with unequal splits of money in favor of French, while nearly equal splits were the most frequent outcome in ItoF treatment interactions. The experimental results are organized through a standard social reference model, modified for taking into account the different marginal value of money for bargainers. In our model, bargaining is driven by relative standing comparisons between players, occurring in terms of real earnings (that is monetary earnings corrected for a purchasing power factor) obtained in the game. The norm of equity behind the equalization of real earnings is called local equity norm, and contrasted to a global equity norm which would encompass the wealth of players beyond the game. According to what we observed, no beyond-game concern seems to be relevantly endorsed by subjects.     

The value of private safety versus the value of public safety

In this study, one group of respondents is offered to purchase a safety device to be installed in their cars, while another group is offered a public safety program (improved road quality) which results in the same size risk reduction. In terms of the value of a statistical life, our results are very reasonable. However, the WTP for the private safety device ishigher than the WTP for the public safety measure. Drawing on a model developed by Jones-Lee (1991), we show that some types of altruists may, but need not, be willing to pay more for a private risk reduction than for a uniform risk reduction of the same magnitude. Still, our empirical results are surprising, and further empirical research seems warranted.     

Contingency Effects of People and Objects on Subsequent Cognitive Functioning in Three-month-old Infants

Three month-old infants' responses to persons and objects who interacted with the infant at two levels of contingency were contrasted in two experiments. In experiment 1, contingent responding of people and objects was controlled. In experiment 2, the faciallvocal dynamics were controlled as well as contingent responding. In both experiments, contingent interaction had different effects on infants depending on whether the “actor” was a person or an object. In addition, the contingency and personlobject variables influenced infants' states of attention to a nonsocial stimulus on subsequent transfer tasks. Specifically, infants who experienced contingent interactions with people exhibited positive affect and exposed themselves to subsequent higher levels of stimulation than infants who experienced noncontingent interactions with people. These infants exhibited negative affective states and exposed themselves to very low levels of subsequent stimulation. In contrast, infants who experienced contingent and noncontingent interactions with objects did not show such variation in emotional expressions. Instead they produced primarily neutral facial expressions in all conditions and did not show very high nor very low levels of interest for the multi-modal stimulus on the subsequent transfer tasks. The discussion centers on the mechanism that allow infants to discriminate between contingencies provided by people and objects and that drive the results obtained on the transfer tasks.     

An Experimental Investigation of the Disparity Between WTA and WTP for Lotteries

In this paper we experimentally investigate the disparity between willingness-to-accept (WTA) and willingness-to-pay (WTP) for risky lotteries. The direction of the income effect is reversed by endowing subjects with the highest price of a lottery when asking the WTP question. Our results show that the income effect is too small to be the only source of the disparity. Since the disparity concentrates on a subsample of subjects, parametric and nonparametric tests of the WTA-WTP ratio may lead to contradictory results. The disparity is significantly reduced when background risk is introduced. That is, putting subjects always into a risky position could improve the contingent valuation method, which is often concerned with the assessment of risky situations such as health risks, automobile safety, etc.      

Questioning Contingency in Social Life: Roles,Agreement and Agency

Structure/agency theories presuppose that there is a unity to structure that distinguishes it from the (potential) diversity of agents' responses. In doing so they formally divide the robust social processes shaping the social world (structure) from contingent agential variation (agency). In this article we question this division by critically evaluating its application to the concept of role in critical realism and structural functionalism. We argue that Archer, Elder‐Vass and Parsons all mistakenly understand a role to have a singular structural definition which agents may then diverge from. Drawing on the work of Gross, Mason and McEachern we argue instead that if agents diverge in their conceptions of what role incumbents should do, there is no single role definition, but rather a range of diverse role‐expectations. Acknowledging this can help us to understand variation in role behaviour, with different incumbents potentially being more exposed to some expectations than others. We argue that considering roles in this way can extend the ability of social scientists to identify robust social processes shaping role behaviour and decrease the extent to which they need to call on contingent factors in such explanations.