Individual and household value of mortality reductions with intrahousehold bargaining
By Strand, J.
HERO Working Paper 2/2004
|| I derive alternative measures of maximum willingness to pay (WTP) and value of statistical
life (VSL) related to changes in the supply of a public good affecting mortality for both
members of two-person households, when members are selfish, live for at most two periods,
and strike efficient Nash bargains over consumption of individual and household goods. I find
no systematic bias in letting one household member conduct the (WTP or VSL) valuation on
behalf of the household. Publicgood VSL may exceed private-good VSL due to each member
attaching (purely selfish) preferences to the event that the other member survives or dies, and
to a possible net income potential of the other member when surviving in period 2. When
period 2 is a retirement period and household members’ incomes are then fixed, interview
surveys tend to overvalue VSL due to ignored negative effects of own survival on government
|| Value of statistical life; household bargaining; intertemporal allocation models; optimal life insurance
4101 Economics of health |
|| Norges forskningsråd
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