PRODUCER AND CONSUMER RESPONSES TO GREEN HOUSING LABELS

We find “green” labels increase residential property values by an average of 5%. This premium varies by label stringency and across market segments. Builders respond to the stringency of labels by strategically incorporating green features to achieve higher ratings. This strategy seems reasonable as there is no market premium for green features that lead to scores between label rating cutoff values. These results raise important questions as to how green label policies should be designed in order to foster the supply of green features. Gradations of green attributes are influential, particularly for highly rated homes. The most stringent labels have the greatest role at the high price end of the market. (JEL Q20, Q40, R31)     

The effect of 1980s tort reform legislation on general liability and medical malpractice insurance

A large number of states adopted tort reforms in the mid-1980s to limit the dramatic surge in insurance losses and premiums. Evidence based on liability insurance data by state indicates that these reforms substantially influenced general liability insurance. The levels of losses, premiums, and loss ratios (a measure of insurance profitability) all reflected the impact of the reforms. The large-scale reform efforts in 1986 were particularly influential. Medical malpractice insurance was much less sensitive to the reform efforts.     

National survey evidence on disasters and relief: Risk beliefs, self-interest, and compassion

A nationally representative sample of respondents estimated their fatality risks from four types of natural disasters, and indicated whether they favored governmental disaster relief. For all hazards, including auto accident risks, most respondents assessed their risks as being below average, with one-third assessing them as average. Individuals from high-risk states, or with experience with disasters, estimate risks higher, though by less than reasonable calculations require. Four-fifths of our respondents favor government relief for disaster victims, but only one-third do for victims in high-risk areas. Individuals who perceive themselves at higher risk are more supportive of government assistance.     

The risky business of insurance pricing

The factors influencing insurance pricing decisions are assessed using the ISO product liability ratemaking files for 1980–1984. The mean loss level has a strong positive effect on manual rates and premium rates/exposure. Evidence on a variety of ambiguity measures is more mixed. As a broad generalization, risk ambiguity lowers manual rates, which may reflect exclusion of large loss outliers as being unrepresentative. Risk ambiguity tends to have a positive effect on actual pricing decisions for particular policies, especially bodily injury lines and the interactive risk-ambiguity model.     

Alternative institutional responses to asbestos

The level of asbestos risk varies widely, with insulation workers facing risks many orders of magnitude greater than other groups, such as school children. After a period of regulatory neglect, asbestos risks are now among the mos stringently regulated risks, with costs per case of cancer prevented on the order of $100 million. Asbestos litigation triggered much of the public action against asbestos, as asbestos cases constituted the majority of all product liability cases in the federal courts from 1988 to 1991. The litigation costs have, however, been substantial, almost three times as great as the amounts transferred to asbestos disease victims. Risk communication potentially could promote efficient risk levels and victim compensation.     

Mortality Risk Perceptions: A Bayesian Reassessment

"This study uses data on perceived and actual mortality risks to test several alternative Bayesian models of the factors influencing risk beliefs. The analysis...indicates that while the hazard rate for the individual age group is an influential factor, the overall population death rate and the discounted expected number of life years lost due to the cause of death are also influential in affecting risk perceptions.... The predictive power of a linear perception model increases with the level of the risk and is least accurate for very small risks."     

The Relative Weights of Direct and Indirect Experiences in the Formation of Environmental Risk Beliefs

Direct experiences, we find, influence environmental risk beliefs more than the indirect experiences derived from outcomes to others. This disparity could have a rational basis. Or it could be based on behavioral proclivities in accord with the well‐established availability heuristic or the vested‐interest heuristic, which we introduce in this article. Using original data from a large, nationally representative sample, this article examines the perception of, and responses to, morbidity risks from tap water. Direct experiences have a stronger and more consistent effect on different measures of risk belief. Direct experiences also boost the precautionary response of drinking bottled water and drinking filtered water, while indirect experiences do not. These results are consistent with the hypothesized neglect of indirect experiences in other risk contexts, such as climate change.     

Policy relevant heterogeneity in the value of statistical life: New evidence from panel data quantile regressions

We examine differences in the value of statistical life (VSL) across potential wage levels in panel data using quantile regressions with intercept heterogeneity. Latent heterogeneity is econometrically important and affects the estimated VSL. Our findings indicate that a reasonable average cost per expected life saved cut-off for health and safety regulations is 7 million to7 million to 8 million per life saved, but the VSL varies considerably across the labor force. Our results reconcile the previous discrepancies between hedonic VSL estimates and the values implied by theories linked to the coefficient of relative risk aversion. Because the VSL varies elastically with income, regulatory agencies should regularly update the VSL used in benefit assessments, increasing the VSL proportionally with changes in income over time.     

Smoking Risk Policy: A Special Issue of the Journal of Risk and Uncertainty

Journal of Risk and Uncertainty -