Abstract
The appropriate approach to valuing risk reduction depends in large part on one’s intent. In the case of government regulatory efforts, the overall objective is typically to value changes in risk. These policies have a small incremental effect in reducing risk, and the typical policy question is how much society is willing to pay for this reduction. When risks are being imposed involuntarily, the objective is often to determine how much the person bearing the risk must be compensated. This measure consequently focuses on a willingness-to-accept amount, which for small changes in risk should reflect the same tradeoff rate as the willingness-to-pay amount.
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Viscusi, W.K. (1997). Economic and Psychological Aspects of Valuing Risk Reduction. In: Kopp, R.J., Pommerehne, W.W., Schwarz, N. (eds) Determining the Value of Non-Marketed Goods. Studies in Risk and Uncertainty, vol 10. Springer, Dordrecht. https://doi.org/10.1007/978-94-011-5364-5_4
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DOI: https://doi.org/10.1007/978-94-011-5364-5_4
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