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Structural benefit transfer: An example using VSL estimates

Publication ,  Journal Article
Smith, VK; Pattanayak, SK; Van Houtven, GL
Published in: Ecological Economics
December 1, 2006

This paper describes and illustrates a method for benefits transfer referred to as preference calibration or structural benefits transfer. This approach requires selection of a preference model, capable of describing individual choices over a set of market and associated non-market goods to maximize utility when facing budget constraints. Once the structure is selected, the next step involves defining the analytical expressions for the tradeoffs being represented by the set of available benefit measures. These algebraic relationships are used with the benefit estimates from the literature to calibrate the parameters of the model. The calibrated model then offers the basis for defining the "new" tradeoffs required for the policy analysis, i.e., for 'transferring benefits'. A new application is used to illustrate the structural benefits transfer logic. It involves the benefits for mortality risk reductions, measured with labor market compensation a worker would accept to be willing to work with added risk. The measure is usually labeled the value of a statistical life (VSL). Our application indicates that we should not have expected differences in these measures for the economic value of risk reductions with age. The calibrated estimates were not greatly different for combinations of risk levels, labor supply choices, wages, and non-wage income for older adults. Thus, simple adjustments relying on value per discounted life year remaining seem questionable. © 2006.

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Published In

Ecological Economics

DOI

ISSN

0921-8009

Publication Date

December 1, 2006

Volume

60

Issue

2

Start / End Page

361 / 371

Related Subject Headings

  • Agricultural Economics & Policy
  • 3899 Other economics
  • 3801 Applied economics
  • 3103 Ecology
  • 1499 Other Economics
  • 1402 Applied Economics
  • 0502 Environmental Science and Management
 

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Smith, V. K., Pattanayak, S. K., & Van Houtven, G. L. (2006). Structural benefit transfer: An example using VSL estimates. Ecological Economics, 60(2), 361–371. https://doi.org/10.1016/j.ecolecon.2006.04.002
Smith, V. K., S. K. Pattanayak, and G. L. Van Houtven. “Structural benefit transfer: An example using VSL estimates.” Ecological Economics 60, no. 2 (December 1, 2006): 361–71. https://doi.org/10.1016/j.ecolecon.2006.04.002.
Smith VK, Pattanayak SK, Van Houtven GL. Structural benefit transfer: An example using VSL estimates. Ecological Economics. 2006 Dec 1;60(2):361–71.
Smith, V. K., et al. “Structural benefit transfer: An example using VSL estimates.” Ecological Economics, vol. 60, no. 2, Dec. 2006, pp. 361–71. Scopus, doi:10.1016/j.ecolecon.2006.04.002.
Smith VK, Pattanayak SK, Van Houtven GL. Structural benefit transfer: An example using VSL estimates. Ecological Economics. 2006 Dec 1;60(2):361–371.
Journal cover image

Published In

Ecological Economics

DOI

ISSN

0921-8009

Publication Date

December 1, 2006

Volume

60

Issue

2

Start / End Page

361 / 371

Related Subject Headings

  • Agricultural Economics & Policy
  • 3899 Other economics
  • 3801 Applied economics
  • 3103 Ecology
  • 1499 Other Economics
  • 1402 Applied Economics
  • 0502 Environmental Science and Management