Road Safety Valuation under a Stated Choice Framework

Abstract

The value of fatal risk reductions is a vital input for road safety cost-benefit analysis. It has been traditionally estimated by means of contingent valuation in spite of growing criticism surrounding this approach. Furthermore, many believe that risk-money trade-offs are not well understood due to the difficulty in internalizing tiny risks. We have succeeded in applying the Stated Choice (SC) approach to tackle this problem, using as one of the attributes the number of accidents with fatal victims (i.e. a proxy for risk). To assess the robustness of SC, we conducted an external validity test based on results for three different studies. We investigated if preferences were well defined according to economic theory (i.e. as initial risk increases, the marginal willingness-to-pay should be higher). We also addressed the generally ignored issue of whether there should be a unique value of fatal risk reductions. We found that people can internalize risk consistently from an economic viewpoint, and that although each sample yields different values of risk reductions, there was a relationship between the risk level and the value of risk reductions in each context examined; this evidence could be most helpful within the context of developing countries. Finally, we offer an hypothesis to explain the differences between our values with those obtained in industrialised countries, highlighting the importance of doing local studies rather than transferring imported values.