Influence of context in contingent valuation approach: application to the value of statistical life (VOSL)

Abstract

This paper examines whether estimation of the value of statistical life (VOSL) is context dependent. Using a contingent valuation (CV) approach, respondents’ willingness-to-pay (WTP) for a 50% mortality risk reduction were elicited in the context of three hypothetical scenarios - traffic accidents, cancer and a hypothetical game of chance. 288 full-time undergraduates at Nanyang Technological University (NTU) were surveyed. WTP values obtained via Kaplan-Meier survival estimate reflected an implied VOSL of S$10.06 million for traffic accidents, S$11.39 million for cancer, and S$9.78 million for game of chance. WTP values obtained via double-bounded probit regression reflected an implied VOSL of S$21.84 million for traffic accidents, S$31.89 million for cancer and S$21.06 million for game of chance. Pairwise analysis of the three scenarios showed a significant difference between cancer and the other two scenarios at the 1% significance level. Our findings contribute to existing literature, which primarily focuses on estimating VOSL in isolated contexts, with a lack of research output addressing cross-contextual comparisons. Additionally, this study incorporates an analysis of various contextual and demographic factors, providing evidence that the significance of factors varies across different scenarios. Lastly, the results strongly support the need for an updated VOSL for Singapore, as our estimates significantly differ from those presented in previous studies.