Journal of Risk and Uncertainty, 13:277-291 (1996) © 1996 Kluwer Academic Publishers The Pain of Road-Accident Victims and the Bereavement of their Relatives: A Contingent-Valuation Experiment NATHALIE G. SCHWAB CHRISTE Institut de recherches ~conomiques et rOgionales (IRER), Universi O, of Neuchdtet, 7 Pierre-gt-Mazel, 2000 Neuchdtel, Swi~erland NILS C. SOGUEL Institut de hautes ~tudes en administration publique (IDHEAP), Universi~ ~ of Lausanne, 2t Route de la Maladikre, 1022 Chavannes-prOs-Renens, Swi~erland Abstract The accurate description of the contingent market is a necessary condition for eliciting willingness-to-pay values. So far, however, the contingent market for a reduction in the risk of being the victim of a road accident has only been broadly specified. This Swiss experiment attempts to define the good to be purchased by respon- dents with greater precision. It concentrates on the human costs of road accidents, i.e., pain, suffering, and bereavement. Respondents were asked to consider themselves either as potential victims of a road accident or as relatives of potential victims and to state their willingness to pay to reduce the likelihood of such an accident occurring. Key words: contingent valuation, road accident, human costs, victims and relatives JEL Classification: D61--Allocative Efficiency, Cost-Benefit Analysis, ll2--Mortality, Morbidity, Disability, J17--Value of Life, J28--Safety, Accidents Various forms of risky behavior may reduce individual welfare either by increasing mor- bidity or shortening life expectancy. Economists have valued these costs in a number of ways. Three approaches are generally identified. The first is based on the resources used to correct adverse effects. It measures what it costs society to restore individuals to the situation they were in before the health-state reduction occurred. The second approach measures the market--and sometimes the nonmarket--productivity of individuals whose health state deteriorates. This is referred to as the human-capital method (HCM), because the estimation is based on these individuals' discounted lifetime earnings or the lost value of their working time. The third approach is based on the preferences of individuals and uses, as a measure of value, an indicator of their willingness to pay (WTP) to reduce the risk of adverse effects. In practice, the contingent-valuation method (CVM) appears to be the most commonly used technique for measuring WTP. In the course of a survey, indi- viduals are presented with a hypothetical situation where they could obtain a reduction in the probability of being injured or killed, perhaps by purchasing a safety device. Indi-