Accident Analysis and Prevention 42 (2010) 1205–1212

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Accident Analysis and Prevention

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Willingness to pay for private and public road safety in stated preference studies:
Why the difference?
Mikael Svensson a,b,∗ , Maria Vredin Johansson c,d
a
Department of Economics, Swedish Business School, Örebro University, Sweden
b
Centre for Research on Child and Adolescent Mental Health, Karlstad University, Sweden
c
National Institute of Economic Research, Stockholm, Sweden
d
Department of Economics, Uppsala University, Sweden

a r t i c l e i n f o a b s t r a c t

Article history: Estimates of the willingness to pay (WTP) for a mortality risk reduction can be used to calculate the value
Received 24 June 2009 of a statistical life, which is a major component in many economic evaluations of environmental and
Received in revised form safety policies. Previous research on the WTP for risk reductions using stated preference methods have
21 December 2009
found that the mean WTP for public risk reductions is significantly smaller compared to the mean WTP
Accepted 19 January 2010
for private risk reductions of equal magnitude. Hence, the use of a private or public scenario in stated
preference studies of e.g. environmental or safety policies may strongly determine the outcome of the
JEL classification:
economic evaluation. In this paper we use a stated preference survey to show that WTP for a private risk
D61
D64
reduction is three times higher compared to a public risk reduction and a significant part of the difference
can be explained by respondents’ attitudes towards privately and publicly provided goods in general.
Keywords: © 2010 Elsevier Ltd. All rights reserved.
Contingent valuation
Private safety
Public safety
Value of a statistical life
Attitudes

1. Introduction new infrastructure investments in Sweden (Persson and Lindqvist,

The scarcity of resources requires that policy makers have
to prioritize between different policies that have different soci-
etal benefits. A commonly used tool to guide prioritization is
cost–benefit analysis, where all relevant benefits and costs asso-
ciated with a policy are monetized and compared with each other.
The higher the benefit–cost ratio, the higher the policy should be
prioritized from an efficiency perspective. For public investments
with benefits including mortality and morbidity risk reductions,
the concept of the value of statistical life (VSL) is used to mone-
tize changes in mortality risk. In many circumstances this is the
single most important parameter in the cost–benefit analysis. For
example, in the evaluation of the American Clean Air Act in the US,
80 percent of the benefits were made up of the value of reduced
mortality risks (Krupnick et al., 2002). As another example, the
value of decreased mortality and morbidity risk constitutes approx-
imately 50 percent of the total benefits in cost–benefit analyses of
∗ Corresponding author at: Örebro University, Swedish Business School, Depart-
ment of Economics, Fakultetsgatan 1, 701 82 Örebro, Sweden.
Tel.: +46 19 30 38 62.
E-mail address: mikael.svensson@oru.se (M. Svensson).
2003). To estimate VSL, economists have relied on either revealed
preferences, which is based on actual behavior, or stated prefer-
ences methods, which use hypothetical surveys were individuals
are asked explicitly about their willingness to pay (WTP). For a
given change in risk (p), VSL is calculated as WTP divided by p.
Although SP methods are flexible and have the advantage of being
easy to purpose-make, they remain controversial. Most SP stud-
ies on VSL employ the contingent valuation (CV) method, in which
individuals are directly asked to value a particular risk reduction.
The SP method has been criticized for not being able to mea-
sure the individual’s preferences correctly due to various biases
(Desvouges et al., 1993; Diamond and Hausman, 1994; Kahneman
et al., 1999). According to Kahneman et al. (1999, p. 204), the
answers to SP questions are “better viewed as expressions of atti-
tudes than as indications of economic preferences”. Defendants of
the SP method have, on the other hand, argued that the different
types of biases mainly are artifacts of poor survey design (Carson
et al., 2001; Carson and Mitchell, 1995; Smith, 1992).
A puzzling result from several surveys eliciting the WTP for risk
reductions is the large difference between the WTP for a private
risk reduction (henceforth called the private WTP) and the WTP
for a public risk reduction (henceforth called the public WTP) –
even if the risk reductions are of equal magnitudes (de Blaeij et al.,

0001-4575/$ – see front matter © 2010 Elsevier Ltd. All rights reserved.
doi:10.1016/j.aap.2010.01.012
1206 M. Svensson, M. Vredin Johansson / Accident Analysis and Prevention 42 (2010) 1205–1212
2003; Hultkrantz et al., 2006; Johannesson et al., 1996). Accord-
ing to economic theory, a selfish individual should have the same
WTP for public and private risk reductions, given equal risk reduc-
tions. A pure altruist, on the other hand, should have a higher
(lower) WTP for a public than a private risk reduction, if the individ-
ual expects the utility of other individuals to increase (decrease).
Thus, only when a pure altruist expects the utilities of others to
decrease do we expect that private WTP > public WTP. A safety
focused altruist (paternalistic) should consistently have a higher
WTP for a public risk reduction. Notwithstanding the theoretical
predictions, empirical evidence systematically shows a large pos-
itive difference between the private WTP and public WTP. In a
meta-analysis of 74 SP-studies de Blaeij et al. (2003) find that the
VSL derived from private WTP is around 80 percent higher than the
VSL derived from public WTP. Hence, in many circumstances the
outcome of a cost–benefit analysis may be dependent on whether
a private or public WTP were used to estimate VSL.
There may be tangible causes, such as dissimilarities in the
context and the framing of the goods, which also affect the valua-
tion (when controlling for individual heterogeneity). For example,
strategic behavior like free-riding, can bias the WTP for a public
good downwards and, thereby, increase the difference. There may
also be a number of intangible causes affecting the valuation of a
good. It has been shown that alternative means of framing equiva-
lent problems has lead to systematic differences in choices (Tversky
and Kahneman, 1986) and Shogren (1990) showed that alternative
risk-reduction mechanisms can also affect the valuation of goods.
Baron (1993) and Baron and Ritov (1993) have documented that
the individual’s attitudes towards the good affect the value of a
good, where an attitude is defined as the outcome of an affective
valuation process in which the sign and the intensity of the emo-
tional response to the object is determined (Kahneman et al., 1999).
The question is if we can completely dismiss attitudes towards the
provision mechanism when it comes to SP studies?
Our main aim in this paper is to propose, and test, a new hypoth-
esis for the difference between private and public WTP: whether
social-psychological variables, like attitudes, may help explain the
yet poorly understood difference between the WTP for private and
public risk reductions.
The rest of the paper is organized as follows. The next section
contains a brief economic and psychological framework that may
be used to explain differences in economic valuation. In Section
3 the survey and descriptive statistics are shown as well as the
explanatory variables. The results are shown in Section 4. Finally,
Section 5 offers a discussion.
2. Theory
The economic theory behind the WTP for private and public
risk reductions can be illustrated in a Hicks–Allais type of model
(Johannesson et al., 1996; Jones-Lee, 1991, 1992). It is a simple ex
ante model where individuals face to be either alive or dead at a
specified time in the future. Individuals are assumed to be con-
cerned about their wealth and mortality risk, and possibly, also
about the wealth and mortality risk of others. The utility function
of the individual (or household) can be written as:
V10 = V10 (10 , y10 , 20 , y20 ),
where 10 is the mortality risk of the individual (or a vector for
the household members) before any change in the mortality risk
and y10 is the corresponding wealth. Furthermore, 20 and y20
are, respectively, the mortality risk and the wealth for all other
individuals. V10 is assumed to be strictly decreasing (increasing)
in the individuals’ own mortality risk (wealth) and non-increasing
(non-decreasing) in all other individuals’ mortality risks (wealth).
Assume that there are two different measures that reduce the
mortality risk of a traffic accident by equal magnitudes. The first
measure is a private purchase of a good that decreases the road-
related mortality risk of the individual, but of no one else. The
second measure is a publicly provided mortality risk reduction
affecting all motorists. The risk reduction changes the mortality
risk from h0 to h1 where h is household (household 1 and house-
hold 2 in our model), and subscripts 0 and 1 refer to before and after
the traffic safety improvement. The economic value of the private
good is then defined as the price p1 of a good that makes an individ-
ual indifferent between having the good at the stated price or not
having the good at all (i.e. the maximum willingness to pay for the
good), and the economic value of the public good is then defined in
the same way and is denoted c1 . The optimization problem can be
written as:
V11 (11 , y10 − p1 , 20 , y20 ) = V10 where 11 < 10 (2)
V11 (11 , y10 − c1 , 21 , y20 − c1 ) = V10
where 11 < 10 and 21 < 20 (3)
In our survey, two sub-samples were asked to state both their
maximum p1 (private WTP) and their maximum c1 (public WTP).
According to theory, p1 = c1 , if the individual is purely selfish. If
the individual is purely altruistic and believes that the road safety
investment will increase (decrease) the welfare of individual 2,
then c1 > p1 (c1 < p1 ) or, if the individual believes others’ utility will
be unaffected c1 = p1 . If the individual is a “safety focused altruist”
(i.e. a paternalistic altruist), and only cares about the safety argu-
ment in others’ utilities, then c1 > p1 .1 Previous research regarding
risk reductions indicates that individuals tend to be safety focused
altruists (Andersson and Lindberg, 2009; Chanel et al., 2005). In an
SP study that would imply that for an equal risk reduction the WTP
should be higher for the public provision and public payment for
the good compared to the private good, i.e. public WTP > private
WTP.
In contrast to the economic definition of the value of a good, the
psychological concept of value is much broader and less precise.
Among social psychologists it is common to refer to the “concept
of attitudes” regarding the value of a good, i.e. “(a)n attitude is a
disposition to respond favorably or unfavorably to a commodity, per-
son, institution, or event” (Ajzen and Peterson, 1988, p. 66). These
disparate views on the concept of value have also led to disparate
views regarding how to interpret the responses from surveys elic-
iting WTP for non-market goods. The economic approach is to
assume that the response can be interpreted as a purchase deci-
sion, and as such, reflect the maximum amount an individual is
willing to pay for the good. According to social-psychological atti-
tude theory, the WTP is best regarded as a behavioral intention
and is, therefore, a reflection of the individual’s attitudes towards
the good (Heberlein et al., 2005; Kahneman et al., 1993). Thus, an
individual’s affective valuation of the characteristics of the good,
the characteristics of the different policies to provide the good and
the characteristics of the payment vehicles are all important deter-
minants for the valuation of the public good (Ajzen and Peterson,
1988). Hence, in contrast to the economic model described previ-
ously, the WTP for a private risk reduction can exceed the WTP for
(1) a public risk reduction for a selfish individual, even if the individ-
ual understands that the risk reductions are of equal magnitude.
For example, this may happen if the individual has affective valu-
1
Potential sequential risk compensating behavior would not affect the conclu-
sions from the model given its static nature. Utility maximization occurs when the
marginal rate of substitution is equal between the private and public risk reduction,
for a selfish individual and equal risk reduction this is when p1 = c1 .
 M. Svensson, M. Vredin Johansson / Accident Analysis and Prevention 42 (2010) 1205–1212
ations regarding the provision of the goods in favor for the private
provision (compared to the public).
3. Data
3.1. The questionnaire
The data in this paper comes from a mail survey conducted in
the spring of 2006 in the city of Örebro in Sweden. Örebro is situ-
ated approximately 200 km west of the capital Stockholm and has a
population of 129,000 with an urban population of 97,000. Örebro
is the regional capital in the county of Örebro, and also has a univer-
sity population of around 10,000. The survey was sent to a random
sample of 1500 individuals based on the Swedish Governments’
Personal- and Address-Register (SPAR), which includes all individ-
uals with an address and currently living in Sweden (both Swedish
and non-Swedish citizens). The total sample was split in four differ-
ent sub-samples (Q1–Q4). Respondents in two of the sub-samples
(Q1 and Q2) were asked about their WTP for both a private and a
public risk reduction of equal magnitudes. In Q1 respondents were
asked to value the private good first, while in Q2 the respondents
were asked to value the public good first. The respondents were
randomly assigned to one of the four sub-samples. In terms of Eq.
(2) the private risk reduction reduces from 10 to 11 . The public
good reduces risks from 10 to 11 for the individual and from 20
to 21 for everyone else. In the remaining two sub-samples respon-
dents were asked about their WTP for one of the risk reductions;
the private (Q3) or the public (Q4).
The risk reduction offered in the contingent valuation question-
naire was framed using the Swedish “Vision Zero” as a starting
point. The “Vision Zero” is a long-term road-safety objective in
Sweden that states that roads and vehicles should be designed so
as to prevent accidents from happening, but if they do happen, to
protect road users from fatalities and serious injuries. It is partic-
ularly suitable to perform this survey in the city of Örebro, since
a well-known local program has been implemented along a major
walking and biking route (from the center of the city to the uni-
versity area) to demonstrate how this “vision” may be achieved in
practice to protect these users. The program consisted of e.g. sepa-
rating the walking and biking route from car traffic and decreasing
the allowed speed limit for cars when car routes intersected walk-
ing and biking routes.
Regarding mortality and morbidity risks, the respondents were
informed that annually four persons are killed and twelve persons
are seriously injured from road traffic accidents in Örebro. The base-
line risk is then the sum of this (16) divided by the population. The
good being offered to the respondents is a road safety improvement,
which would reduce the average mortality and morbidity risk by 50
percent. The WTP question for the private good risk reduction was
framed as: “How much would you at most be willing to pay each year
for renting the safety device that cuts your own risk for fatal and seri-
ous traffic accidents in half?”. The WTP question for the public good
was identical in all aspects with exception that it was described as a
public road safety investment that would reduce the mortality and
morbidity risks. Respondents stated an open-ended amount indi-
cating their maximum WTP for the risk reduction.2 Respondents
that answered zero on the WTP question were asked a follow-
up question to elicit if the response was a protest response or a
2
An open-ended question was used despite its theoretical drawbacks because
it provides more information per respondent in comparison to closed-ended ques-
tions, which was deemed important in this paper which mainly has a methodological
purpose. Despite its theoretical drawbacks, open-ended questions have been shown
to suffer less from hypothetical bias (Balistreri et al., 2001).
1207
“true” zero.3 In the private scenario it is obvious that the respon-
dent would also be the one bearing the cost of the product. In the
public scenario it was stated that payment would be implemented
coercive for everyone (a lump-sum tax).
The motivation to ask for their WTP for both a reduction in fatal-
ity risk and serious injury risk is that the “Vision Zero” targets both
fatalities and severe injuries. In addition, a scenario where the pro-
posed measure reduces both fatalities and severe injuries seems
more plausible than a scenario targeting only fatalities. As a mat-
ter of fact, when explicitly asked, 73 percent of the respondents
in our survey did not believe zero traffic fatalities to be a realis-
tic goal. A credible and realistic scenario is important in order to
get reliable WTP estimates (Powe and Bateman, 2004). Estimat-
ing VSL and the value of statistical severe injury (VSSI) can be
estimated ex-post by using “death-rate-equivalents” (Hultkrantz
et al., 2006; Persson and Cedervall, 1991; Viscusi et al., 1991). It
should, however, be noted that the main purpose of this paper is
not to elicit valid estimates of VSL, but to analyze the difference
between private and public WTP for equal magnitude risk reduc-
tions.
After one reminder, the analytic sample consisted of 875 obser-
vations, corresponding to an overall response rate of 59 percent.
The mean income in our sample is slightly higher than the pop-
ulation average income (and mean income in Örebro is 95.5% of
Swedish national mean income), but we cannot reject equality
between sample and population incomes, and this is also true for
the age and employment variables (Örebro, 2007). The previously
mentioned structure of the survey can be seen in Table 1, which
shows that the respondents in sub-sample Q1 were asked about
their WTP both for the private and the public risk reduction. Individ-
uals in sub-sample Q2 received the same questions, but in reversed
order in order to control for potential anchoring effects of the first
question. Sub-sample Q3 (Q4) was only asked about the WTP for a
private (public) risk reduction. In Q4 respondents were also asked
about their beliefs about the average citizens WTP for the public
good. This question was asked after the public WTP question and is
not included in the analysis here.
In the analysis, we will at first focus on the difference in WTP
at the individual level (within-sample test), i.e. on the results from
Q1 and Q2, and later on a between-sample test using only the first
answer in each sub-sample, thereby avoiding the problem with
anchoring.
3.2. Explanatory variables: binary dummy approach
Together with the WTP question(s), we also gathered informa-
tion about the respondents’ attitudes and behaviors towards traffic
safety and his/her preferences for private and public goods in gen-
eral. Considering the explanatory variables in the empirical model,
we use two different strategies: (i) we use binary dummy vari-
ables as indicators of positive/negative attitudes to private/public
provision in general and (ii) we use factor analysis and scoring to
construct individual values of the latent (i.e. unobservable) psy-
chological attitude and preference variables. The advantages with
the first approach are simplicity and straightforwardness and that
regression results have a meaningful interpretation. The advan-
tages with the second approach are the non-theoretic way of letting
3
The follow-up question was framed as: “If you answered 0 SEK as your maximum
willingness to pay, please motivate this by ticking one of the boxes below”, and the
respondent were offered five different choices to motivate their zero response. We
interpreted answers as “protest zeros” if they answered “question unclear”, or “I
do not believe the risk will be reduced”, and as “true zeros” if they answered “risk
reduction too small” or “cannot afford to pay”. The last choice was to give their
own explanation for their WTP = 0. There were in total 49 responses that may be
characterized as protest responses.
1208 M. Svensson, M. Vredin Johansson / Accident Analysis and Prevention 42 (2010) 1205–1212

Table 1
Description of the sub-samples of the questionnaire.

Sub-sample First question Second question N (#) Answers (#) Response rate (%)

Q1 Private safety good Public safety good 500 324 64

Q2 Public safety good Private safety good 500 284 57
Q3 Private safety good – 250 145 57
Q4 Public safety good – 250 140 56

Table 2
Overview of independent variables.

Variable Description Mean (std. err.)

Socio–economic variables
Age Age of the respondent 42.96 (15.56)
Income Monthly pre-tax income of the respondent’s household (1000 SEK) 31.72 (20.64)
Gender Gender = 1 if the respondent is female 0.53 (0.50)
Children Children = 1 if the respondent’s household includes children under the age of 18 0.38 (0.49)

Attitude and behavior variables (binary dummy variables)

Safety minded =1 if “always” or “almost always” uses private traffic safety measures 0.71 (0.46)
Safety attitude =1 if responds “strongly agree” or “agree” to statement that traffic safety is important 0.88 (0.33)
Private public behavior =1 if respondent tries to avoid public providers when such exist on a competitive market 0.40 (0.50)
Private public attitudes =1 if responds “strongly agree” or “agree” to statement that public providers should not be involved and/or compete 0.35 (0.48)
on private markets
Safety tax =1 if “strongly agree” or “agree” to statement that taxes should be increased if used to finance traffic safety 0.36 (0.48)
improvements
Safety distribution =1 if “strongly agree” or “agree” to statement that more taxes should be re-allocated from other sectors to traffic 0.08 (0.27)
safety investments
Pay self =1 if “strongly agree” or “agree” to statement that the individuals should pay themselves for risk reductions 0.45 (0.50)
Lower taxes =1 if “strongly agree” or “agree” to statement that taxes should be lower 0.52 (0.50)
Smaller public sector =1 if “strongly agree” or “agree” to statement that less activities should be performed by public sector 0.29 (0.45)
Risk perception =1 if respondents has somewhat correct traffic mortality risk perception → = 1 if the respondent stated a number of 0.37 (0.48)
annual fatalities between 350 and 550 (correct number ≈450)
Latent variables
Speeding A higher value indicates that the respondent thinks speeding is acceptable behavior 0.00 (0.82)
Public owner A higher number indicates that the respondent is negative to public ownerships 0.00 (0.79)
Market behavior A higher number indicates that the respondent uses private rather than public providers on different markets when 0.00 (0.70)
both are available

the data “speak for itself” and that the constructed variables’ valid- if used to finance increased safety improvements, seen by the vari-
ity can be tested. able Safety Tax, is 0.36. An even lower proportion (0.08) agrees to
Answers on attitude questions towards safety and pri- the statement that money should be re-allocated from other public
vate/public providers were elicited on a scale from “strongly agree” sector to increase traffic safety, see variable Safety Distribution. At
to “strongly disagree”. In the first approach, if the respondent stated a proportion of 0.45, the Pay Self variable indicates that individuals
to “strongly agree” or “agree” we code the answer as sharing the should pay for themselves for mortality risk reductions. A propor-
relevant attitude in question. Hence, respondents that answer that tion of 0.52 agrees that taxes should be lower (Lower Taxes), but
they are “indifferent”, “disagree” or “strongly disagree” are coded only 0.29 agrees that the public sector should be smaller (Smaller
as not sharing the relevant attitude in question. Public Sector).
Answers on behavioral questions were elicited on a scale rang-
ing from “always” to “never”. If the respondent stated to “always”
3.3. Explanatory variables: factor analytic approach
or “almost always” perform the activity, we coded the answer as
performing the precautionary activity. Respondents that answered
Factor analyses, that may be confirmatory or exploratory, stud-
“sometimes”, “seldom” or “never” were coded as not performing
ies the correlations between a large number of variables (Bollen,
the precautionary activity. In Table 2, under “Attitude & Behav-
1989). In a factor analysis the variables are grouped together into a
ior variable (binary dummy variables)”, the relevant variables are
number of different factors. For each factor, the variables included
listed. Table 2 also includes the socio–economic variables we con-
are more highly correlated with each other than with variables in
trol for in the estimations.
other factors (i.e. the within correlation is greater than the between
The variable Safety Minded is equal to one if the respondent
correlation). Each factor is interpreted according to the meaning of
“always” or “almost always” uses precautionary traffic safety mea-
its included variables. For example, a respondent’s answers to the
sures. Private Public Behavior indicates if the respondent actively
questions about his/her use of safety gear when biking and driv-
tries to avoid public providers when such exist on private markets,
ing may be interpreted as his/her preferences for “traffic safety
which a proportion of 0.40 in the sample do. An example of this
behavior”. Based on the estimated factor loadings, individual val-
would be not to choose public dental care providers and, hence,
ues of the latent variable underlying each factor can be estimated
prefer private alternatives. The related attitude question (Public Pri-
through “scoring”, either through the regression method or through
vate Attitudes) shows that a proportion of 0.35 generally agrees to
the Bartlett scoring method. In this paper, we use the regression
the statement that public providers should not be involved at all in
method.4
private markets.
Other attitude variables includes Safety Attitude, which shows
that most respondents agrees that traffic safety is an important
topic, but the proportion that agrees that taxes should be increased 4
The Bartlett scoring method did not produce qualitatively different results.
 M. Svensson, M. Vredin Johansson / Accident Analysis and Prevention 42 (2010) 1205–1212
Table 3
The matrix of factor loadings: uniqueness’ in parentheses and Cronbach alphas.
Indicator variable Latent variable
Speeding Market Behavior Public Owner
y3 (Speed) 0.70 (0.51)
y14 (Speed limit) 0.72 (0.49)
y13 (Low speed) 0.57 (0.68)
y15 (Telephone) 0.59 (0.65)
y16 (Insurance) 0.54 (0.71)
y17 (Dentist) 0.47 (0.78)
y18 (Energy) 0.61 (0.62)
y19 (Pharmacy) 0.57 (0.67)
y20 (System) 0.55 (0.69)
y21 (Landsting) 0.40 (0.84)
Cronbach’s alpha (˛) 0.69 0.67 0.56
Through an exploratory factor analysis, we judged that three
were an adequate number of factors to retain. Table 3 gives the
matrix of the estimated factor loadings and the indicators’ unique-
ness’. An indicator’s uniqueness is the percent of the indicator’s
variance that is not explained by the factor. Values exceeding 0.6
are often considered to be high.
It is evident that all indicators have positive factor loadings and
that most of the indicators have very high uniqueness. The factors
maintained, and summarized in Table 2 under “Latent variables” in
the analysis were (i) Speeding (three indicators), (ii) Market Behavior
(four indicators), and (iii) Public Owner (three indicators). The latent
variable Speeding refers to the respondent’s attitudes towards
speeding and his/her own habits of speeding. A low value of the
Speeding variable indicates that the respondent dislikes speeding
and adheres to speed limits. A high value of the Market Behav-
ior variable indicates that the respondent dislikes public providers
and uses private alternatives rather than public on markets where
both are available (e.g. using private run dental care rather than
public run dental care providers). The latent variable Public Owner
summarizes the respondent’s attitudes towards public provision of
specific amenities like pharmaceuticals and alcoholic beverages. A
high value indicates that the respondent has negative attitudes to
public provision.
4. Results
4.1. Descriptive statistics on private and public WTP
Table 4 shows the mean WTP for the private and public risk
reductions (p1 and c1 in Eqs. (2) and (3), respectively) tabulated by
the order of the questions. As previously mentioned, WTP is the
joint WTP for both the mortality and morbidity risk reduction by
50 percent.
Mean WTP is highest for both goods when the private good is
valued first, i.e. there is a clear order effect in the data such that
private WTP is relatively higher when valued first and public WTP
is relatively lower when valued first. This indicates that the answer
to the second question is anchored on the first question. The first
questions on the other hand line up well with the corresponding
single question versions.5
When comparing the between differences (between-sample
comparison) in the samples that only answered one question (pri-
vate or public), we find that the mean WTP for a private risk
reduction is more than three times as high as the WTP for a public
risk reduction, which is very similar to a recent study examining
5
Private WTP is about the same when valued as the first question (before public
WTP) and when valued as the only good, the same relationship is true for public
WTP.
1209
the difference between private and public WTP for an equal risk
reduction (Hultkrantz et al., 2006).
4.2. Within-sample test
In this section we perform regression analyses on the dependent
variable WTP, which is a measure of the within-sample difference
in Private and Public WTP (WTP = private WTP − public WTP). A
positive (negative) value means that the private (public) good is
valued higher than the public (private) by the respondent. Table 5
shows the results.
Table 5 indicates that WTP is age-dependent. The negative
coefficient of the age variable in Model A implies that for each
year the respondent’s age is increasing WTP decreases by 18.33.
Ceteris paribus, WTP is zero at an age of approximately 38 years.
For respondents older than 38 years, the WTP becomes negative,
implying that public safety is valued higher.
In Model B the dummy variables Private Public Attitudes, Safety
Tax and Pay Self shows an association with WTP. Private Public
Attitudes is positive, indicating that those that are negative to pub-
lic interference on the private market in general, also have a higher
private WTP compared to public WTP. The coefficient for the cate-
gory variable Safety Tax is negative and significant at the 10-percent
level, which is suggestive evidence that the respondents who agree
to pay higher taxes to finance traffic safety improvements have a
relatively higher public than private WTP, which is consistent with
intuition. We also find that the category variable Pay Self increases
the WTP, i.e. the respondents that hold the attitude that they
prefer to privately pay for safety increases, also value private risk
reductions significantly higher than public risk reductions (with an
equal magnitude).
Model C shows the results treating the attitude variables in the
form of factor scores and the parameter of the latent variable Public
Owner is significant at p = 0.06 with the expected positive sign. That
is, the more negative the respondent is towards public ownership,
the greater his/her difference between private and public WTP. The
two other latent variables have no significant impact on the WTP.
Most consistent in all models is the large and significant fixed effect
from sub-sample Q1.
In all the models R2 is low, implying that much of the variance
is unexplained. This is quite common in the literature and may be
expected considering respondents’ uncertainty and ambivalence in
valuing non-market goods, especially using open-ended valuation
techniques. Despite the low R2 for the full model, we feel confi-
dence in the fact that our explanatory variables show validity both
regarding the sign of the coefficient, but also that the size of the
coefficient for several variables is large and statistically significant.
That e.g. income is not statistically significant may be explained by
the low stated WTP as a share of total income.
4.3. Between-sample test
After the initial within-sample test, we turn to a between-
sample test. A between-sample test is generally a more appropriate
test, considering that the respondents have incentives to behave
internally consistent in a within-sample test (Carlsson and
Martinsson, 2001; Fischhoff and Frederick, 1998; Johansson-
Stenman and Svedsäter, 2008). It has also been shown that there
are large order effects in our sample, and that the large difference
between private and public WTP is pronounced if we only focus on
the respondents’ more reliable first answer.
Therefore, we perform the between-sample test by only
focusing on the first WTP question for each respondent in all sub-
samples. This implies that roughly half of the observations come
from respondents answering a private WTP question, while the
other half come from respondents answering a public WTP ques-
1210 M. Svensson, M. Vredin Johansson / Accident Analysis and Prevention 42 (2010) 1205–1212

Table 4
Descriptive statistics on mean WTP in D with standard deviations in parentheses.

Private good valued first (Q1) Public good valued first (Q2) Only valued private good (Q3) Only valued public good (Q4)

Private WTP 221 (359) 88 (152) 223 (371) –

Public WTP 146 (261) 79 (153) – 70 (133)

Note: exchange rate D 1 = 10.50 Swedish krona (2009-05-08).

Table 5
Within-sample test of difference in WTP in sub-samples Q1 and Q2.

Model A Model B Model C

Coeff. (std. err.) Coeff. (std. err.) Coeff. (std. err.)

Age −18.33** (8.64) −14.43** (6.84) −22.33** (10.66)

Income 2.21 (6.78) −0.02 (6.10) 2.95 (7.91)
Gender −83.81 (201.06) −93.76 (220.67) −174.83 (250.20)
Children 264.26 (248.86) 289.36 (232.06) 236.84 (302.60)
Risk perception 156.95 (229.58) 141.79 (232.85) 188.00 (277.33)
Safety minded – – −7.15 (250.23) – –
Safety attitudes – – 153.50 (218.04) – –
Private public behavior – – −182.58 (202.79) –
Private public attitudes – – 372.04* (220.07) – –
Safety tax – – −343.84* (203.46) – –
Safety distribution – – 366.40 (546.21) – –
Pay self – – 467.06** (198.11) – –
Lower taxes – – −182.60 (182.11) – –
Smaller public sector – – −220.39 (201.30) – –
Speeding – – – – −159.46 (152.61)
Market behavior – – – – 36.76 (148.51)
Public owner – – – – 321.81* (170.24)
Q1 675.87*** (192.30) 693.81*** (198.24) 768.56*** (201.10)

N 433 433 351

R2 0.05 0.08 0.07

Dependent variable is the difference in stated WTP (in Swedish kronor) between the private and publicly provided good for the joint mortality and morbidity risk reduction.
*
p < 0.10 based on robust standard errors.
**
p < 0.05 based on robust standard errors.
***
p < 0.01 based on robust standard errors.

Table 6
Between-sample test, based on each respondent’s first answer.

Model A Model B

Coeff. (std. err.) Coeff. (std. err.)

Age −15.41** (6.00) −18.06* (11.03)

Income 1.46 (4.52) 11.59* (6.80)
Gender −444.54** (177.25) −620.39** (272.10)
Children 50.64 (198.43) −255.85 (300.38)
Risk perception 55.75 (195.92) 93.30 (293.74)
Safety tax 748.00*** (215.43) – –
Safety tax × private 153.92 (378.26) – –
Pay self 491.28*** (169.77) – –
Pay self × private 42.80 (350.94) – –
Private public attitudes −317.60* (173.19) – –
Private public attitudes × private 785.27** (356.76) – –
Private 717.47*** (251.95) 1,460.48 (236.78)
Speeding – – −167.53 (127.21)
Speeding × private – – 15.34 (367.42)
Market behavior – – −359.87** (169.12)
Market behavior × private – – 656.23* (405.99)
Public owner – – −185.74 (136.32)
Public owner × private – – 926.54** (367.20)

N 656 523
R2 0.13 0.10

Controls for the different sub-samples are included in the regressions (hence controlling for whether or not private WTP question was answered), but results omitted here.
Dependent variable is the stated WTP (in Swedish kronor) for the joint mortality and morbidity risk reduction (either privately or publicly provided, randomly assigned to
different respondents).
*
p < 0.10 based on robust standard errors.
**
p < 0.05 based on robust standard errors.
***
p < 0.01 based on robust standard errors.
 M. Svensson, M. Vredin Johansson / Accident Analysis and Prevention 42 (2010) 1205–1212
tion. To check whether the attitude variables used in Section 4.2
have any explanatory power to explain the higher WTP for the
private good, the attitude variables are interacted with a dummy
variable equal to one if the response comes from the private WTP
question, and zero otherwise. Thus, if we expect a certain variable
to significantly affect the private WTP, the interaction variable of
the attitude variable and the private good dummy should turn out
economically and statistically significant.
As in Section 4.2, both the binary dummy variable approach and
the factor analytic approach are used. Considering that Model B
in Table 5 included plenty of attitude variables, creating interac-
tion variables with the private dummy for each attitude variable
would create an overwhelming number of explanatory variables.
To overcome this problem, only the attitude variables that proved
statistically significant in the estimation shown in Table 5 will be
used. Table 6 shows the results from the between-sample test.
The results further strengthen some of the conclusions from the
within-sample test, even though there are some new results wor-
thy of notice. Regarding Model A, Safety Tax and Pay Self have a
large economic and statistical positive effect on WTP. This can be
interpreted as that respondent that have a general sense that safety
is important, are willing to pay more. The interaction with the pri-
vate dummy might have been expected to be negative for Tax Safety
and positive for Pay Self. In none of the cases it cannot be rejected
that the interactions are equal to zero. The effect of Private Pub-
lic Attitudes is negative in Model A, while the interaction with the
private dummy is positive and significant. Hence, respondents that
feel that public providers should stay out of markets have a lower
WTP for safety, if it is not private safety, where they have a rela-
tively larger WTP. This result is consistent with the finding from
the within-sample test.
The results in the factor analytic approach shown in Model B
give similar conclusions. A result in line with the within-sample
test is that the interaction between Public Owner and the private
good dummy is positive and significant. This indicates that respon-
dents with negative attitudes towards public ownership are willing
to pay relatively more for the private alternative. The same relation-
ship can be found for the interaction between the Market Behavior
variable and the private good dummy. That is, using private rather
than public providers when both are available on markets is asso-
ciated with higher private WTP. The latter result was also found in
the within-sample test but without being statistically significant.
Thus, both the within- and between-sample test tend to sup-
port the hypothesis that negative attitudes to public provision and
positive market attitudes increases the private WTP compared to
the public WTP.
5. Discussion and conclusions
Consistent with previous findings (de Blaeij et al., 2003;
Hultkrantz et al., 2006; Johannesson et al., 1996), we find a large
difference between the mean WTP for private and public risk reduc-
tions. In a between-sample comparison, avoiding anchoring by only
focusing on the first WTP question for the road safety investment,
mean private WTP is D 221 and mean public WTP is approximately
D 88.
The multivariate analyses in Section 4 show that the differ-
ence in WTP to some extent can be explained by differences in
attitudes towards the private and public goods. Individuals with
negative attitudes towards public interference and tax-raises to
promote safety, value the private risk reduction higher. The dif-
ference between the private and public WTP is also increased by
respondents who prefer to invest in risk reduction by themselves.
The results from using the factors generated in the factor ana-
lytic approach point in the same direction. Respondents preferring
1211
private providers on markets where both are available and respon-
dents that are negative to public providers of goods in general have
a relatively higher WTP for the private good. Altogether our results
indicate that the difference between the private and public WTP
partly can be attributed to differences in attitudes towards the
provider.
A previous theoretical explanation for the difference between
private and public WTP for risk reductions has been provided by
Johannesson et al. (1996), who showed that the private WTP might
be higher than the public WTP if the respondents are purely altru-
istic and believe that the safety investment will decrease welfare
for other individuals. In Q4 the respondents were asked about how
much they thought the average citizen would be willing to pay for
the risk reduction presented. The mean WTP was D 50, compared
to respondents own mean WTP for the public good in Q4 which
was D 70. Apparently the average WTP shows that the respondents
believe that they themselves value the risk reductions higher than
the average citizen. This could be seen as some support for the
explanation proposed by Johannesson et al. (1996). However, that
explanation is also dependent on the assumption of purely altruistic
preferences, and the empirical evidence so far tends to indicate that
most individuals are not pure altruists (Andersson and Lindberg,
2009; Chanel et al., 2005).
Another potential explanation for the difference between pri-
vate and public WTP may be found in Carson and Groves (2007),
who argue that the only elicitation mechanism that (may) be incen-
tive compatible is the single dichotomous choice question (yes/no)
for a new public good with coercive payment (or choice of which of
two new public goods to provide). They argue that this is the only
framing that may be consequential, e.g. using a private good fram-
ing implies that it is always rational for the respondent to overstate
the WTP, since when the good is on the market the individual can
always choose whether or not to actually purchase the good.
Furthermore, we find a large order effect, meaning that the WTP
for the same good depends on the order of the questions posed.
The sub-sample answering the private WTP question first stated
a significantly higher WTP both for the private and the public risk
reductions, compared to the sub-sample answering the public WTP
question first. Theories such as prospect theory has sometimes been
used to explain that there will be a larger difference if valuing the
“more valuable” good first, e.g. a larger risk reduction compared to
a smaller risk reduction (Kahneman and Tversky, 1979). The argu-
ment is that due to loss aversion a loss is seen as worse than an equal
gain. In this example, if the respondents on average see the private
good as the more valuable good, we may expect that when valu-
ing the private good first, the second question is seen as a “loss” (a
less valuable good). When valuing the public good first, the second
question is seen as a “gain”. Based on prospect theory, we would
then expect that the difference in WTP will be larger when private
good is valued first, which fits with the descriptive patterns in the
data here (Bateman et al., 2004; Clark and Friesen, 2008; Powe and
Bateman, 2003).
To sum up, considering that the private WTP were almost three
times higher than the public WTP, the use of provider (explicit
or implicit) in surveys eliciting VSL (such as contingent valuation
or choice modeling) will have a major impact on the results, and
hence, on outcomes in societal cost–benefit analysis where these
values are meant to be used. In this paper we show that the respon-
dents’ attitudes towards the provider and towards the financing
of the good may explain some of the differences between private
and public WTP. Based on this, and on the incentive compatibil-
ity factor, it may be argued that the relevant conclusion is that
it is important that the survey is framed to reflect the use of the
elicited value. Consequentially, in cases when the intended use is
for public policy purposes, the WTP eliciting scenario should be
public.
1212 M. Svensson, M. Vredin Johansson / Accident Analysis and Prevention 42 (2010) 1205–1212
Acknowlegements
The authors would like to thank Henrik Anderson, Lars
Hultkrantz, Per Johansson, Peter Martinsson, Björn Sund, Magnus
Johannesson, seminar participants at Örebro University and two
anonymous reviewers for valuable comments and support. The
authors are solely responsible for the results and views expressed
in this paper.
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