Background:
Traffic safety is often built combining mandatory publicly financed and voluntary privately financed methods and measures designed to decrease the individual’s risk of experiencing a traffic accident. A frequent finding in the literature on cost-benefit analysis of traffic safety measures is that many people seem to value an expected positive impact on health or safety differently depending on whether it is achieved using a private or a public intervention. To our knowledge, there is much less know about how the relationship between respondent’s subjective wellbeing, measured in terms of life satisfaction, and their willingness to pay (WTP) for a measure that decrease of the individual’s risk of experiencing a traffic accident.
The aim of the paper:
We aim to analyze the relationship between the individuals’ wellbeing and their willingness to pay to reduce by half the risk of a traffic accident for vulnerable road-users such as pedestrians and bicyclists controlling for various aspects that can be attributed to the public/private dichotomy of the measure and individual characteristics and attitudes.
Data and methods:
A representative sample for Swedish adult inhabitants responded online to our contingent valuation survey during May 2020. We use five different scenarios, where the first four hold constant the safety technology, which is a mobile phone app, but vary if the provider is a public or private institution, if the payment vehicle is a fee for use or a uniform tax, and whether the adoption of the app is mandatory or not. In the fifth scenario, the technology is changed to a censor-based intervention in the infrastructure. All respondents were presented with two of these scenarios. All responded to an app scenario with public provision, uniform tax, and voluntary use. The second scenario was chosen randomly from the other four. In addition to the valuation questions respondents were also presented with a number of attitudinal questions.
Our dependent variable is defined by the respondent’s maximum WTP score from the payment scale of five given levels [0, 10, 25, 50, 100]. In this way, the respondent’s WTP is constrained by the limited range of integer values listed in the payment scale. So, a respondent who states that the maximum they would be willing to pay is, for example 25, could have a true value anywhere in the interval. The censoring of the variable of the true value violates the assumption that the error term is normally distributed. Even though in practice, OLS may provide a robust estimator of the conditional mean function, we also use interval regression model, which offer a more appropriate setting for our data.
Results:
Our preliminary results suggest that expected utility (subjective well-being) depends on both objective and perceived risks and beliefs. When not controlling for the individual’s life satisfaction, we found significantly higher valuations of the infrastructure solution, which might suggest that the difference in valuations may arise due to other aspects of the framing of the private and public goods offered. But respondents with high value of life satisfaction and no experience of traffic accidents seem to have a higher WTP for the private good, a result that we need to investigate in more detail.