A risk-risk trade-off assessment of climate-induced mortality risk changes.

The impact of climate change on human health was identified as a priority for the UN COP26 conference. In this article, we consider climate-induced changes to mortality risks and how to incorporate these formally in the policy appraisal process. In the United Kingdom (UK), the Value of Statistical Life (VSL) is used to monetarize the benefits of policies to reduce mortality risks but it remains an open, empirical question as to whether the current VSL (£2.14 million per fatality prevented, December 2021 values) for traffic accidents should be applied in other contexts without any modification and particularly for extreme weather event fatalities. Using a representative sample of the UK population, we aim to estimate and better understand the trade-offs people make when comparing mortality risks, drawing on psychological insights from construal level and regulatory focus theories. We design a stated preference survey using a relative valuation framework with nonmonetary, risk-risk trade-off questions between extreme weather event and traffic accident mortality risks. We find evidence of an extreme weather event risk premium of 1.2-1.6 (implying a climate-related VSL of £2.52-£3.41 million). We also find that participants who are psychologically close to climate change (based on construal level theory), weigh reducing extreme weather event mortality risks almost two times that of reducing traffic accident mortality risks.

Sample restrictions and the elicitation of a constant willingness to pay per quality adjusted life year.

It is well established that the underlying theoretical assumptions needed to obtain a constant proportional trade-off between a quality adjusted life year (QALY) and willingness to pay (WTP) are restrictive and often empirically violated. In this paper, we set out to investigate whether the proportionality conditions (in terms of scope insensitivity and severity independence) can be satisfied when data is restricted to include only respondents who pass certain consistency criteria. We hypothesize that the more we restrict the data, the better the compliance with the requirement of constant proportional trade-off between WTP and QALY. We revisit the Danish data from the European Value of a QALY survey eliciting individual WTP for a QALY (WTP-Q). Using a "chained approach" respondents were first asked to value a specified health state using the standard gamble (SG) or the time-trade-off (TTO) approach and subsequently asked their WTP for QALY gains of 0.05 and 0.1 (tailored according to the respondent's SG/TTO valuation). Analyzing the impact of the different exclusion criteria on the two proportionality conditions, we find strong evidence against a constant WTP-Q. Restricting our data to include only respondents who pass the most stringent consistency criteria does not impact on the performance of the proportionality conditions for WTP-Q.

Risk aversion and religious behaviour: Analysis using a sample of Danish twins.

Economics offers an analytical framework to consider human behaviour including religious behaviour. Within the realm of Expected Utility Theory, religious belief and activity could be interpreted as an insurance both for current life events and for afterlife rewards. Based on that framework, we would expect that risk averse individuals would demand a more generous protection plan which they may do by devoting more effort and resources into religious activities such as church attendance and prayer, which seems to be in accordance with previous empirical results. However, a general concern regards the problems of spurious correlations due to underlying omitted or unobservable characteristics shaping both religious activities and risk attitudes. This paper examines empirically the demand for religion by analysing the association between risk attitudes on the one hand, and church attandance and prayer frequency on the other controlling for unobservable variables using survey data of Danish same-sex twin pairs. We verify the correlation between risk preferences and religion found previously by carrying out cross-sectional analyses. We also show that the association between risk attitudes and religious behaviour is driven by the subgroup of individuals who believe in an afterlife. In addition, when re-analysing our results using panel data analyses which cancel out shared factors among twin pairs, we find that the correlation found between risk aversion and religious behaviour is no longer significant indicating that other factors might explain differences in religious behaviour. Caution is needed in the interpretation of our results as the insignificant association between risk aversion and religious behaviour in the panel data analyses potentially might be due to measurement error causing attenuation bias or lack of variation within twin pairs rather than the actual absence of an association.

Comparing Increments in Utility of Health: An Individual-based Approach.

BACKGROUND: Many economic evaluations of health care changes rely on quality-adjusted life year (QALY) estimates. Notably, though, the QALY approach values health states rather than changes in health states. Hence, a gain in utility of health is only indirectly valued through an ex ante preference elicitation of health states and the subsequent subtraction of health state values from one another, rather than being valued directly. There is therefore an underlying assumption that individuals, from an ex ante perspective ceteris paribus, would be indifferent between equal utility increments from health states with different baseline utilities. OBJECTIVE: The aim of this paper is to develop a method that would allow us to measure individual-based preferences over utility increments from different baselines. We elicit our data using face-to-face interviews on a sample of UK individuals. RESULTS: Overall, we find that gains of "equal" utility increments from different baselines are not found to be equally preferable by the individual. CONCLUSIONS: The results indicate that the subtraction approach could lead to sub-optimal resource allocations and suggest that a new approach which values health changes directly would better reflect individual preferences. This paper provides the foundations for a method to achieve this.

Valuation of morbidity and mortality risk reductions. Does context matter?

The main research purpose of the present study was to test for any differences in the valuation of morbidity and mortality risk reductions across two contexts; traffic and health. A contingent valuation study on preferences for morbidity and mortality risk was carried out in Denmark in 2007. Respondents were randomised into two different arms: one arm in which the valuation took place in the context of health and another arm in which the context was traffic. In both contexts, the inferior health state was described by way of the standardized EQ-5D descriptive system. We obtained a total sample of 520 respondents from an online database. In the present study we found clear evidence of a context effect on expressed valuations of identical risk reductions. This was true irrespective of whether the adverse outcome in question was death or inferior health. This result suggests that interventions targeting risks of death or risks of ill health should not necessarily be valued equally across sectors. From a welfare economic perspective, the use of the same estimates across contexts - and especially across sectors - could be misleading and in worst case lead to inefficient resource allocations.