Valuation of health risks: Methodological challenges and recent evidence from Sweden

Cost-benefit analysis (CBA) is frequently used to guide public expenditure, including policies designed to reduce health risks. Examples include efforts to reduce the risk of traffic accidents by improving infrastructure, and policies aimed at reducing the risk of being contaminated by an infectious disease by providing safer food and water. The CBA approach requires measuring the costs and benefits of the policy using the same metric, and in practice a monetary measure is commonly used. Because a market price for health risks is not available, however, analysts rely on analytical techniques to estimate individuals' willingness to pay for risk reductions using revealed- or stated-preference methods. This presentation will give an overview of the use of stated preference methods to value health risks and will present some recent evidence on the value of traffic safety risks using data from a large survey conducted in Sweden.