Trudy Ann Cameron; Working Papers and Manuscripts, with Abstracts

Trudy Ann Cameron

cameron@uoregon.edu
Main page
Comprehensive vita: PDF

Abstracts of Publications

MANUSCRIPTS AND WORKING PAPERS

THOUGHTS ON VSLs

T.A. Cameron (2008) "The Value of a Statistical Life: [They] do not think it means what [we] think it means" " November 2008 Newsletter of the Association of Environmental and Resource Economists

This piece was accompanied by an inventory of reactions, culled from the press and online sources, to a July 10, 2008 AP news story about the EPA's decision to modify the number being used for the Value of a Statistical Life. (Updated October 2009)

T.A. Cameron (2009) "The Value of a Statistical Life: [They] do not think it means what [we] think it means" " Expanded manuscript (~40 pages)

Within the confines of the discipline of economics, the term “Value of a statistical life” (VSL) is an eminently reasonable label to attach to the concept involved. Outside the discipline, however, this choice of terms has been singularly unhelpful. I inventory a sample of reactions by legislators, journalists, and ordinary people during the most recent dust-up about VSLs following yet another exposé on this subject in the popular press. I contend that there could be a considerable reduction in wasted resources if economists were willing to change their terminology to something less incendiary for the uninitiated, and that this could help to increase the acceptance of benefit-cost analysis as an adjunct to the decision-making process for environmental, health and safety regulations. Historically, within our profession, we have adapted ordinary words to special purposes. A different choice of ordinary words, in this context, would probably be welfare-enhancing. For reasons laid out here, I propose we change our standard unit of measurement and replace the “value of a statistical life” with “willingness to swap alternative goods and services for a microrisk reduction in the chance of sudden death” (in the standard case). Analogous descriptions will be appropriate for other types of risks to life and health.

UNDER REVIEW

R.C. Bosworth, T.A. Cameron, and J.R. DeShazo (2008) "Is An Ounce of Prevention Worth a Pound of Cure? Comparing Demand for Public Prevention and Treatment Policies" (under review)

We find estimated marginal utility associated with avoided deaths to be about twice as high for prevention policies as for treatment policies. Our research design permits us to explain these preference differences in terms of attributes common across both types of policies including the number of avoided deaths, avoided cases of illness, and type of illness avoided. We also explore several sources of systematic heterogeneity in preferences for prevention versus treatment policies. We find statistically significant heterogeneity with respect to the specific types of diseases (for all major diseases), the identity of the group being targeted by the policy, and the individual’s socio-economic characteristics. [Research supported by the US Environmental Protection Agency (R829485), by Health Canada (Contract H5431-010041/001/SS), and the Mikesell Foundation at the University of Oregon]

REVISE-AND-RESUBMIT

T.A. Cameron and J.R. DeShazo (2008) "Demand for Health Risk Reductions" ("Flagship" paper for project on valuation of health risk reductions; status: revise-and-resubmit, July 2009)

A choice model based on utility in each of a sequence of prospective future health states permits us to generalize the concept of the Value of Statistical Life (VSL). Our representative national survey asks individuals to choose between costly risk-reducing programs and the status quo in randomized stated choice scenarios. We estimate separate marginal utilities for discounted net income and avoided illness years, post-illness years, and lost life-years. Our estimates permit calculation of overall willingness to pay to reduce risks for a wide variety of different prospective illness profiles. These can be benchmarked against the VSL as a special case.

**[Research supported by the US Environmental Protection Agency (R829485), by Health Canada (Contract H5431-010041/001/SS), the National Science Foundation (SES-0551009), and the Mikesell Foundation at the University of Oregon]

Background information:

T.A. Cameron and J.R. DeShazo (2008) "Differential Attention to Attributes in Utility-theoretic Choice Models" (status: revise-and-resubmit, July 2009)

We show in a theoretical model that benefits of allocating additional attention to evaluating the marginal attribute with in choice set depend upon the expected utility loss from making a suboptimal choice as a result of ignoring that incremental attribute. Guided by this analysis, we then develop a very general and practical empirical method for measuring the individual’s propensity to attend to attributes. As a proof of concept, we offer an empirical example of our method using a conjoint analysis of demand for programs to reduce health risks. Our results suggest that respondents differentially allocate attention across attributes, as a function of the mix of attribute levels in a choice set. This behavior can cause researchers who fail to model attention allocation to incorrectly estimate the marginal utilities derived from selected attributes. This illustrative example is a first attempt to implement an attention-corrected choice model with a sample of field data from a conjoint choice experiment.

**[Research supported by the US Environmental Protection Agency (R829485), by Health Canada (Contract H5431-010041/001/SS), the National Science Foundation (SES-0551009), and the Mikesell Foundation at the University of Oregon]

B. Cai and T.A. Cameron (2008) "Distributional Preferences and the Incidence of Costs and Benefits in Climate Change Policy" (status: revise-and-resubmit, July 2009)

We explore the relationship between willingness to pay (WTP) for climate change mitigation and distributional preferences, by which we mean individuals’ opinions about who should be responsible for climate change prevention and whether the share of climate change impacts borne by the poor is a cause for concern. We use 1770 responses to an online stated preference survey. The domestic costs in our survey’s policy choice scenarios are expressed as a set of randomized shares across four different payment vehicles, and the international cost shares are randomized across four groups of countries. We also elicit respondents’ perceptions of the likely regressivity of climate change impacts under a policy of business-as-usual. WTP is higher when larger cost shares are borne by parties deemed to bear a greater responsibility for mitigation, and when respondents believe (and care) that the impacts of climate change may be borne disproportionately by the world’s poor. That WTP for an environmental policy depends on the distributional consequences of the policy is an unsettling result: efficiency assessments are typically assumed to be separate from equity considerations in most benefit-cost analyses.

**[The data for this study were collected with funding from the National Science Foundation (SES-9818875).]

T.A. Cameron, J.R. DeShazo and E.H. Johnson (2007 initial version) "The Effect of Children on Adult Demands for Health-Risk Reductions" (status: revise-and-resubmit)

We examine patterns in adults’ willingness to pay for health-risk reductions by allowing both their marginal utilities of income and their marginal disutilities from health risks to vary systematically with the structures of their households. Demand by adults for programs which reduce their own health risks is found to be influenced by (1) their parenthood status, (2) the numbers of children in different age brackets currently in their households, (3) the ages of the adults themselves and, (4) for health risks with latency periods.

**[Research supported by the US Environmental Protection Agency (R829485), by Health Canada (Contract H5431-010041/001/SS), the National Science Foundation (SES-0551009), and the Mikesell Foundation at the University of Oregon]

T.A. Cameron and G.R. Gerdes (2006 initial version) "Discounting versus risk aversion: their effects on individual demands for climate change mitigation" (status: revise-and-resubmit)

Risk aversion and time preferences are important sources of heterogeneity in preferences for public policies with near-term costs and uncertain future benefits. Using stated preference data, we first jointly estimate individual-specific risk aversion and discount rate parameters then use these as individual “characteristics” in a separate model to explain preferences for climate change mitigation policies. The more risk-averse the individual, and/or the lower their discount rate, the higher is their willingness to pay. We also simulate expected demand under counterfactual conditions—such as risk neutrality, or the lower social discount rates that would be used by a benevolent central planner.

**[The data for this study were collected with funding from the National Science Foundation (SES-9818875).]

T.A. Cameron and G.R. Gerdes (2005 initial version) "Individual Subjective Discounting: Form, Context, Format, and Noise" (status: revise-and-resubmit)

Debate about the appropriate value for any single social discount rate for public projects stems in part from our lack of knowledge about how individual discount rates vary across people and across choice contexts. It would be valuable to be able to estimate aggregate willingness to pay for a public project as a function of heterogeneous individual discount rates. We could then contemplate a strategy of counterfactual simulation of aggregate willingness to pay for the same project under the systematically lower discount rates that are often argued to be compatible with the normative goal of intergenerational equity. Using a sample of roughly 15,000 choices by over 2000 individuals, we estimate prototype utility-theoretic models concerning private tradeoffs involving money over time that reveal individual-specific discount rates. Statistically significant heterogeneity in discount rates is quantified along many dimensions for an exponential discounting model, a competing hyperbolic model, and a generalized hyperbolic model. We control for experimentally differentiated choice scenarios and elicitation formats, for sociodemographic heterogeneity, and for complex forms of heteroscedasticity.

**[The data for this study were collected with funding from the National Science Foundation (SES-9818875).]

PENDING SUBMISSION

E.H. Johnson, T.A. Cameron and J.R. DeShazo (2007 initial version) "'Scenario Adjustment' in Stated Preference Research" (status: under revision, July 2009)

Stated preference (SP) survey methods have been used increasingly to assess willingness to pay for reductions in risks to life and health. Poorly designed SP studies are subject to a number of well-known biases, but many of these biases can be minimized when they are anticipated ex ante and accommodated in the study’s design or during data analysis. We identify another source of potential bias, which we call “scenario adjustment,” where respondents assume that the substantive alternative(s) in an SP choice set, in their own particular case, will be different than the survey instrument describes. We use an existing survey, developed to ascertain willingness to pay for private health-risk reduction programs, to demonstrate a strategy to control and correct for scenario adjustment in the estimation of willingness to pay. This strategy involves data from carefully worded follow-up questions and ex post econometric controls for each respondent’s subjective departures from the intended choice scenario. Our research has important implications for the design of future SP surveys.

**[Research supported by the US Environmental Protection Agency (R829485), by Health Canada (Contract H5431-010041/001/SS), the National Science Foundation (SES-0551009), and the Mikesell Foundation at the University of Oregon]

R.C. Bosworth, T.A. Cameron, and J.R. DeShazo (2008) "The Role of Rates of Time Preference in Demand for Environmental Health Programs: Do Private Discount Rates Help Explain Public Choices?" (status: under revision, July 2009)

We evaluate alternative strategies for specifying time preferences in a model of demand for environmental health programs with lengthy time profiles of future costs and benefits. Within a stated preference survey, individuals expressed their preferences over alternative environmental health programs, as well as their preferences over alternative time-patterns for disbursement of lottery winnings. Our central contribution is a model that estimates environmental health program preferences jointly with individual-specific time preferences in a financial context. We explore both exponential and hyperbolic discounting specifications for this jointly estimated model. We then compare these estimation strategies with the conventional strategy that assumes a homogeneous discount rate for all individuals, but explores alternative assumptions with sensitivity analyses.

**[Research supported by the US Environmental Protection Agency (R829485), by Health Canada (Contract H5431-010041/001/SS), and the Mikesell Foundation at the University of Oregon]

J.R. DeShazo and T.A. Cameron (2005 initial version) "Two Types of Age Effects in the Demand for Reductions in Mortality Risks with Differing Latencies" (status: pending submission - awaiting acceptance of main paper from project)

We develop and test an empirical model of individuals’ intertemporal demands for programs to mitigate health risks over the remaining years of their lives. We estimate this model using data from an innovative national survey of demand for preventative health care. We find qualified support for the Erhlich (2000) life-cycle model, which predicts that individuals expect to derive increasing marginal utility from reducing health risks that come to bear later in their lives. However, we also find that as individuals age, there appears to be a systematic downward shift in their anticipated schedule of marginal utility for risk reduction at future ages. Our model improves upon earlier work by differentiating between the respondent’s current age and the future ages at which they would experience adverse health states. Using estimated demand schedules specific to an individual’s current age, we demonstrate the calculation of values for risk mitigation programs that reduce the probabilities of specified time profiles of adverse future health states involving various latency periods.

**[Research supported by the US Environmental Protection Agency (R829485), by Health Canada (Contract H5431-010041/001/SS), the National Science Foundation (SES-0551009), and the Mikesell Foundation at the University of Oregon]

J.R. DeShazo and T.A. Cameron (2006 initial version) "The Effect of Health Status on Willingness to Pay for Morbidity and Mortality Risk Reductions" (status: pending submission - awaiting acceptance of main paper from project)

Both actual and expected morbidity systematically affect individuals’ demands for both life-saving policies and preventative health care. Using a large general-population sample, we estimate a utility-theoretic model of consumer preferences across risk reduction programs targeted at a wide variety of major health threats with differing illness profiles. Individuals’ demands for programs targeting a particular illness are higher when there is a history of that illness and when subjective risks are higher. A history of other illnesses and greater other-illness subjective risks decrease demand. These comorbidity effects operate through the marginal utilities of both (i) adverse health states and (ii) income.

**[Research supported by the US Environmental Protection Agency (R829485), by Health Canada (Contract H5431-010041/001/SS), the National Science Foundation (SES-0551009), and the Mikesell Foundation at the University of Oregon]

T.A. Cameron and J.R. DeShazo (2006 initial version) "A Comprehensive Assessment of Selection in a Major Internet Panel for the Case of Attitudes toward Government Regulation" (status: pending submission)

The rise of large internet consumer panels for survey research raises the question of whether samples of respondents drawn from these panels are representative of the underlying population. To assess this question we model the attrition/selection process for one major consumer panel, maintained by Knowledge Networks, Inc (KN). Starting from KN’s over 525,000 random-digitdialed (RDD) panel-recruitment telephone contact attempts, and ending with a sample of respondents to an actual online survey, we span all junctures at which systematic selection could occur. Our analysis begins by matching addresses or telephone exchanges to the appropriate census tract for the initial half-million residential telephone numbers in the RDD contact-attempt pool. This permits us to use a set of fifteen orthogonal factors based on census tract characteristics, plus county voting percentages in the 2000 Presidential election, to look for neighborhood characteristics that influence whether an initial RDD contact attempt eventually results in a usable response to a specific survey with a sample size of 2,911. We then examine how non-random selection into the estimating sample affects respondents’ answers to one specific survey question about the proper role of government in environmental, health and safety regulation. Using two distinct approaches, we do find evidence of modest sample selectivity. However, we find that these selection effects are not statistically significant in explaining respondents’ attitudes about the proper role of government in society.

**[Research supported by the US Environmental Protection Agency (R829485), by Health Canada (Contract H5431-010041/001/SS), the National Science Foundation (SES-0551009), and the Mikesell Foundation at the University of Oregon]

DRAFTED AND PRESENTED

T.A. Cameron, J.R. DeShazo, and E.H. Johnson (2008) "Willingness to Pay for Health Risk Reductions: Differences by Type of Illness" (status: pending submission; presented at 2008 AERE Workshop, U.C. Berkeley, June 2008, revised version presented at WEAI/AERE sessions, June 2009)

In this paper, we examine how individual willingness to pay (WTP) for health risk reductions varies with the type of health threat in question. Our research focuses on systematic differences in WTP for health risk reductions across different types of major health threats, including five types of cancers (breast cancer, prostate cancer, colon cancer, lung cancer, skin cancer), chronic heart disease (as well as sudden heart attacks), respiratory disease, strokes, diabetes, Alzheimer’s disease and traffic accidents. Our empirical results suggest that the marginal disutility from each type of health state differs across categories of illness (or injury). This suggests that models which constrain the estimated marginal utility parameters for different health states to be the same across all illnesses may be too restrictive and may cause us to lose information that may be very valuable from a policy perspective. The main contribution of this paper is to reinforce the case for why it may not be reasonable to assume one common value for WTP for risk reductions across all types of health risks.

**[Research supported by the US Environmental Protection Agency (R829485), by Health Canada (Contract H5431-010041/001/SS), the National Science Foundation (SES-0551009), and the Mikesell Foundation at the University of Oregon]

E. Duquette, T.A. Cameron, and J.R. DeShazo (2008) "Subjective Choice Difficulty in Stated Preference Surveys" (status: pending submission; presented at AAEA/AERE meetings, Orlando, FL, July 2008; revised version presented at WEAI/AERE sessions, June 2009)

A growing literature has examined how parameter estimates in random utility choice models might be affected by the “complexity” of the choice. The existing literature has tended to capture complexity using several “objective” features of the choice set. However, the difficulty of a choice results from the interplay between objective choice complexity (in attribute space), individual preferences (which may make alternatives similar in utility space even though they are distant in attribute space), and the cognitive resource constraints that individuals may face. We take advantage of a stated preference survey sample where respondents were asked explicitly to rate the difficulty of each choice. Earlier work tends to infer greater choice difficulty from larger error variances in a reduced form model where factors believed to reflect complexity are allowed to shift the error variance. In contrast, we can assess whether these factors have a direct effect on subjective choice difficulty. Using an ordered probit specification, we model subjective choice difficulty ratings as a function both of the properties of the choice set and the characteristics of the decision-maker. Our findings reveal that commonly used choice complexity measures do not fully explain subjective choice difficulty.

**[Research supported by the US Environmental Protection Agency (R829485), by Health Canada (Contract H5431-010041/001/SS), the National Science Foundation (SES-0551009), and the Mikesell Foundation at the University of Oregon]

T.A. Cameron, J.R. DeShazo, and P. Stiffler (2008) "Willingness to Pay for Small Reductions in Morbidity and Mortality Risks: Canada and the United States" (status: pending submission; presented at 2008 CREE meetings, Ryerson University, Toronto, Canada, Sept 2008; revised version presented at WEAI/AERE sessions, June 2009)

Benefit-cost analysis of environmental policies frequently requires estimates of the social benefit associated with human health improvements. We assess differences between Canadian and US individuals’ willingness to pay (WTP) for health risk reductions using a large stated preference survey conducted across both countries. Our utility-theoretic choice model allows different and systematically varying marginal utilities for avoided future time in different adverse health states (illness years, recovered/remission years, and lost life years). We find significant differences between Canadian and US preferences, and WTP also differs systematically with age, gender, education, and marital status, as well as a number of attitudinal and subjective health-perception variables. To permit comparison with conventional estimates of the “value of a statistical life,” we focus on the special case of WTP to avoid sudden death in the current period. Age profiles for WTP are markedly different across the two countries. Canadians tend to display substantially flatter age profiles, with peak WTP realized at older ages. In some cases, differences in WTP between Canada and the US disappear for Canadians who have prior experience with going outside of their provincial health plan for medical diagnostic tests.

**[Research supported by the US Environmental Protection Agency (R829485), by Health Canada (Contract H5431-010041/001/SS), the National Science Foundation (SES-0551009), and the Mikesell Foundation at the University of Oregon]