VALUING REDUCED RISKS TO CHILDREN: THE CASE OF BICYCLE SAFETY HELMETS

LANELLE BEMBENEK WIGGINS (*) The protection of children's health has recently become a mandated priority for federal policy makers. To assess many of the regulations that affect children's health, policy makers need estimates of the monetary value of reducing mortality risks to children. Although the economics literature has provided many estimates of the value of statistical life (VSL) for adult populations, it has provided none for school age children. This article studies the market for bicycle safety helmets and estimates for the first time a separate but comparable VSL for children and adults. We derive three estimates of VSL for each of three age categories (5 to 9, 10 to 14, and 20 to 59) that range from $1.1 to $4.0 million. In all cases, estimates for adults are highest, followed by estimates for the youngest children. (JEL J13, J17) I. INTRODUCTION Since the 1980s, federal agencies have been subject to executive orders that emphasize benefit-cost analysis as a principal tool for assessing major proposed regulations. For example, Executive Order No. 12866, "Regulatory Planning and Review," requires major rules issued by a federal agency to be assessed through benefit-cost analyses. In order to estimate the benefits of a policy whose purpose is to improve public health or safety, analysts must estimate the monetary value of risk reductions. Economists have published many estimates of such values, most from hedonic wage analyses that examine wage differentials between workers in high- and low-risk jobs (Fisher, Chestnut, and Violette, 1989; Viscusi, 1992). However, these estimates have been criticized as reflecting the preferences of only a segment of the population, characterized as predominantly male, between the ages of 18 and 65, and willing to accept risky jobs. Economists have less frequently turned to safety product marketplaces to estimate values of reductions in risks. Through the purchase of safety products, the public reveals its preference and its valuation for reduced risk. This alternative source of valuation information represents an opportunity to examine the preferences of broader segments of the population. Children make up a segment of the population that has recently become a mandated priority for policy makers. Executive Order No. 13045 (1997) requires federal agencies to assign a high priority to assessing health and safety risks that disproportionately affect children. As will be explained below, the value of reducing risks to children is quite likely different from the value of reducing risks to adults. Thus, values of reduced risk estimated via the hedonic wage method are likely to be inappropriate to transfer to children. In addition, because children are generally not wage earners, the hedonic wage method itself is of little use to economists concerned specifically with children. A promising alternative is to examine decision making in marketplaces for safety products that target children. Since children do not make independent economic decisions, the relevant decision makers are parents. Thus, this article estimates parental values of reduced risk to children by examining the market for child bicycle h elmets. Although the economics literature contains an abundance of estimates of the values of both reduced mortality and reduced morbidity risks for adults, it contains only one estimate of the value of reduced mortality risk for children (Carlin and Sandy, 1991). In addition, there are only a handful of morbidity values estimated for children. Finally, only one study known to the authors estimates the value of reducing a risk to children and a comparable value of reducing a similar risk to adults (Liu et al., 2000). (1) This article contributes to the sparse literature focused on children by estimating the value of reduced mortality risk for two age categories that span the middle years of childhood--ages 5 to 9 and ages 10 to 14--as well as for an adult age category. …