Threats to health or safety: Perceived risk and willingness-to-pay

This paper outlines the problems involved in determining how people perceive risks to human life, safety or health. Central to the paper is the argument that one cannot arbitrarily assume that some convenient, probability measure actually has any relevance to the bases upon which people decide that one activity is riskier than another. The empirical results presented indicate that respondents made a series of distinctions between hazards, assessing the risks of each type upon different bases, suggesting that people do not appear to evaluate risks to health and safety in the abstract. Indeed the principal problem of eliciting individuals' preferences in the context of risk is that people are unlikely to know what their preferences are before they confront a choice. In consequence it is proposed that any elicitation method must be so designed that respondents are first enabled to discover their preferences before stating them.