High Values to Reduce Children’s Risks

In benefit-cost analysis, fatality risk reductions are usually valued based on estimates of adults’ willingness to pay for changes in their own risks, regardless of whether the risk reduction accrues to adults or children. CHDS faculty Lisa A. Robinson and James K. Hammitt, research assistant Lucy O’Keeffe, and William Raich conducted a criteria-driven review of the research to determine the extent to which this approach might understate the value of policies targeted on the young. They report the results in “Valuing Children’s Fatality Risk Reductions,” published in the Journal of Benefit-Cost Analysis.

The researchers find that the ratio of values for children to values for adults ranges from 0.6 to 2.9; however, most estimates are greater than 1.5. Although some studies suggest that the divergence between child and adult values decreases as the child ages, this finding is not universal. They conclude that analysts should test the sensitivity of their results to the use of higher values for children than adults. Additional empirical research is needed to support more precise estimates of the variation in values by age that can be featured in the primary analysis.

Related news: Teaching Benefit-Cost Analysis
Related news: Regulating Cost-Benefit Analysis