The Value of Mortality Risk Reductions in Delhi, India

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Bhattacharya, Soma
Alberini, Anna
Cropper, Maureen L
Road accidents kill nearly 1.2 million people each year worldwide, two-thirds of whom live in developing countries. Traffic crashes may indeed become the third leading cause of death in developing countries by the year 2020 (Murray and Lopez, 1996). For governments in developing countries to make informed decisions about investments in traffic safety, it is imperative that the benefits of road traffic improvements be monetized and compared with costs. This, however, requires estimates of the value of reductions in risk of death. The goal of the dissertation is to provide estimates of the value of mortality risk reductions in a traffic safety context in Delhi, India. To estimate the value of road safety improvements in Delhi requires understanding the nature of developing country traffic risks. Methods of valuing traffic fatalities used in high-income countries based on seatbelt use or purchase of safer cars are not applicable here. In my survey I asked 1200 commuters what they would pay to reduce their own risk of dying as a (a) pedestrian, (b) driver of a two-wheeler, and (c) commuter, regardless of travel mode. These scenarios mirror the bulk of fatal accidents in Delhi. I find that mean WTP for mortality risk reduction increases with the size of risk reduction, as predicted by economic theory. WTP for a given risk change increases with income and education. The estimation results broadly confirm the Bayesian updating assumption, in that WTP increases with baseline exposure to risk, measured by commute time, whether the respondent travels as part of his job and whether he drives a two-wheeler. Mean WTP is three times larger for a respondent who drives a two-wheeler and travels on the job than for one who does not. The results of my survey indicate that the VSL is individuated, i.e., it varies across groups of potential beneficiaries of traffic safety programs (two-wheeler drivers, persons with bachelors degree, etc.). For the most highly exposed individuals--the VSL is about $150,000 (PPP, 2005). Transferred estimates adjusted for income from other developed and developing countries indicate a VSL that is much larger than my estimate. These findings underscore the importance of conducting original valuation studies.