Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
959022 | Journal of Environmental Economics and Management | 2010 | 12 Pages |
Abstract
The paper shows that ambiguity aversion increases the value of a statistical life if the marginal utility of an increase in wealth is larger if one is alive rather than dead. Intuitively, ambiguity aversion has a similar effect as an increase in the perceived baseline mortality risk, and thus operates as the “dead anyway” effect. A numerical example suggests, however, that ambiguity aversion cannot justify the substantial “ambiguity premium” apparently embodied in environmental policy-making. The paper also shows that ambiguity aversion decreases the marginal cost of individual self-protection effort but may well decrease its marginal benefit, so that the total effect of ambiguity aversion on self-protection is unclear.
Keywords
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Nicolas Treich,