Valuing non-marginal changes in mortality and morbidity risk.

Many stated-preference studies that seek to estimate the marginal willingness-to-pay (WTP) for reductions in mortality or morbidity risk suffer from inadequate scope sensitivity. One possible reason is that the risk reductions presented to respondents are too small to be meaningful. Survey responses may thus not accurately reflect respondents preferences for health and safety. In this paper we propose a novel approach to estimating the value per statistical life (VSL) or the value per statistical case (VSC) based on larger risk reductions measurable as percent changes. While such non-marginal risk reductions are easier to understand, they introduce well known biases. We propose a methodology to de-bias VSL and VSC estimates derived from the evaluation of non-marginal risk reductions and present a proof of concept using simulated stated preference data.

A Unified Probabilistic Framework for Cancer Risk Management.

Cancer risk assessments in the regulatory realm are often deterministic. Probabilistic approaches that allow characterizing and propagating uncertainty and variability are better suited to predict the socioeconomic impacts of regulating carcinogens. In this article, I present a unified framework for cancer risk management consisting of (i) a probabilistic exposure model that takes into account variability in individual exposure to the substance of concern; (ii) a probabilistic dose-response model that accounts for differences in individual cancer susceptibility; (iii) an impact assessment model that quantifies individuals' excess lifetime cancer risk; and (iv) a welfare model that values changes in disability-adjusted life expectancy based on workers' willingness-to-pay and aggregates individual valuations across the population at risk. I illustrate the framework with data on occupational exposure to hexavalent chromium in France. In a cohort of 10,000 synthetic workers, about one third of the exposed benefit from the introduction of a binding occupational exposure limit (BOEL). Limiting hexavalent chromium exposure to the BOEL reduces the statistical worker's excess lifetime risk of fatal and nonfatal lung cancer by 4.7E-3 and 1.5E-3, respectively. At cohort level, the risk reduction corresponds to 738.4 full and 30.7 disability-adjusted life years saved. The expected welfare gain of introducing the BOEL is close to €30 million. A major advantage of the framework is its ability to visualize uncertainty and variability inherent to cancer risk assessment. Notwithstanding some implementation challenges, the framework provides a transparent characterization of regulatory impacts that supports informed risk management decisions.

Theoretical bounds on the value of improved health.

Policies that improve health and longevity are often valued by combining expected gains in quality-adjusted life years (QALYs) with a constant willingness-to-pay (WTP) per QALY. This constant is derived by dividing value per statistical life (VSL) estimates by expected future QALYs. We explore the theoretical validity of this practice by studying the properties of WTP for improved health and longevity in a framework that makes minimal assumptions about the shape of an agent's utility function. We find that dividing VSL by expected QALYs results in an upper bound on the WTP for a marginal improvement in the quality of life, as measured by gains in health status or longevity. Calibration results suggest that analysts using this approach to monetize health benefits overestimate the value of a program or policy by a factor of two on average. We also derive a lower bound on the WTP for improved health and longevity that permits a novel empirical test for the descriptive validity of the QALY model. Our calibrations suggest that this lower bound is on average 20% smaller than the actual WTP.

Dinner with Bayes: On the revision of risk beliefs.

We study how people form and revise health risk beliefs based on food safety information. In an online experiment, subjects stated their perceived risk of contracting a foodborne illness before and after receiving information about the population average risk and the eating habits of the average consumer. Precautionary effort in handling and preparing food reduced prior risk beliefs, but did not affect the belief revision process. About one quarter of subjects either fully ignored the information provided or revised their beliefs inconsistently with the Bayesian learning hypothesis. We find several factors related to the subjects' numerical skills that explain information refusal and inconsistent belief revisions and discuss them in the context of health risks.

The value of disease prevention vs treatment.

We present an integrated valuation model for diseases that are life-threatening. The model extends the standard one-period value-per-statistical-life model to three health prospects: healthy, ill, and dead. We derive willingness-to-pay values for prevention efforts that reduce a disease's incidence rate as well as for treatments that lower the corresponding health deterioration and mortality rates. We find that the demand value of prevention always exceeds that of treatment. People often overweight small risks and underweight large ones. We use the rank dependent utility framework to explore how the demand for prevention and treatment alters when people evaluate probabilities in a non-linear manner. For incidence and mortality rates associated with common types of cancers, the inverse-S shaped probability weighting found in experimental studies leads to a significant increase in the demand values of both treatment and prevention.

The welfare value of FDA's mercury-in-fish advisory: a dynamic reanalysis.

Assessing the welfare impact of consumer health advisories is a thorny task. Recently, Shimshack and Ward (2010) studied how U.S. households responded to FDA's 2001 mercury-in-fish advisory. They found that the average at-risk household reduced fish consumption by 21%, resulting in a 17%-reduction in mercury exposure at the cost of a 21%-reduction in cardioprotective omega-3 fatty acids. Based on a static assessment of the health costs and benefits Shimshack and Ward concluded that the advisory policy resulted in an overall consumer welfare loss. In this note, we propose a dynamic assessment that links the long-term cardiovascular health effects of the advisory to life-cycle consumption. We find that under reasonable assumptions the welfare loss might be much larger than suggested. Our analysis highlights the importance of accounting for dynamic effects when evaluating persistent changes in exposure to environmental health risks.

Risk trade-offs in fish consumption: a public health perspective.

Fish consumption advisories instruct vulnerable consumers to avoid high mercury fish and to limit total fish intake to reduce neurotoxic risk. Consumption data from the U.S. suggest that nontarget consumers also respond to such advice. These consumers reduce exposure to mercury and other toxicants at the cost of reduction in cardioprotective fatty acids. We present a probabilistic model to assess these risk trade-offs. We use NHANES consumption data to simulate exposure to contaminants and nutrients in fish, employ dose-response relationships to convert exposure to health end points, and monetize them using benefit transfer. Our results suggest that newborns gained on average 0.033 IQ points from their mothers' compliance with the prominent FDA/EPA advisory. The welfare gain for a birth cohort is estimated at $386 million. This gain could be fully offset by increments in cardiovascular risk if 0.6% of consumers aged 40 and older reduced fish intake by one monthly meal until they reached the age of 60 or if 0.1% of them permanently reduced fish intake.

Which fish should I eat? Perspectives influencing fish consumption choices.

BACKGROUND: Diverse perspectives have influenced fish consumption choices. OBJECTIVES: We summarized the issue of fish consumption choice from toxicological, nutritional, ecological, and economic points of view; identified areas of overlap and disagreement among these viewpoints; and reviewed effects of previous fish consumption advisories. METHODS: We reviewed published scientific literature, public health guidelines, and advisories related to fish consumption, focusing on advisories targeted at U.S. populations. However, our conclusions apply to groups having similar fish consumption patterns. DISCUSSION: There are many possible combinations of matters related to fish consumption, but few, if any, fish consumption patterns optimize all domains. Fish provides a rich source of protein and other nutrients, but because of contamination by methylmercury and other toxicants, higher fish intake often leads to greater toxicant exposure. Furthermore, stocks of wild fish are not adequate to meet the nutrient demands of the growing world population, and fish consumption choices also have a broad economic impact on the fishing industry. Most guidance does not account for ecological and economic impacts of different fish consumption choices. CONCLUSION: Despite the relative lack of information integrating the health, ecological, and economic impacts of different fish choices, clear and simple guidance is necessary to effect desired changes. Thus, more comprehensive advice can be developed to describe the multiple impacts of fish consumption. In addition, policy and fishery management interventions will be necessary to ensure long-term availability of fish as an important source of human nutrition.

Experimental evidence against the paradigm of mortality risk aversion.

This article deals with the question of how societal impacts of fatal accidents can be integrated into the management of natural or man-made hazards. Today, many governmental agencies give additional weight to the number of potential fatalities in their risk assessments to reflect society's aversion to large accidents. Although mortality risk aversion has been proposed in numerous risk management guidelines, there has been no evidence that lay people want public decisionmakers to overweight infrequent accidents of large societal consequences against more frequent ones of smaller societal consequences. Furthermore, it is not known whether public decisionmakers actually do such overweighting when they decide upon the mitigation of natural or technical hazards. In this article, we report on two experimental tasks that required participants to evaluate negative prospects involving 1-100 potential fatalities. Our results show that neither lay people nor hazard experts exhibit risk-averse behavior in decisions on mortality risks.

Dealing with the white death: avalanche risk management for traffic routes.

This article discusses mitigation strategies to protect traffic routes from snow avalanches. Up to now, mitigation of snow avalanches on many roads and railways in the Alps has relied on avalanche sheds, which require large initial investments resulting in high opportunity costs. Therefore, avalanche risk managers have increasingly adopted organizational mitigation measures such as warning systems and closure policies instead. The effectiveness of these measures is, however, greatly dependent on human decisions. In this article, we present a method for optimizing avalanche mitigation for traffic routes in terms of both their risk reduction impact and their net benefit to society. First, we introduce a generic framework for assessing avalanche risk and for quantifying the impact of mitigation. This allows for sound cost-benefit comparisons between alternative mitigation strategies. Second, we illustrate the framework with a case study from Switzerland. Our findings suggest that site-specific characteristics of avalanche paths, as well as the economic importance of a traffic route, are decisive for the choice of optimal mitigation strategies. On routes endangered by few avalanche paths with frequent avalanche occurrences, structural measures are most efficient, whereas reliance on organizational mitigation is often the most appropriate strategy on routes endangered by many paths with infrequent or fuzzy avalanche risk. Finally, keeping a traffic route open may be very important for tourism or the transport industry. Hence, local economic value may promote the use of a hybrid strategy that combines organizational and structural measures to optimize the resource allocation of avalanche risk mitigation.