Sylvia J. Brandt, PhD, Resource Economics, University of Massachusetts, Amherst, Stockbridge Hall, Amherst, MA 01003-9246, 413-545-5722, brandt@resecon.umass.edu and Michael, W. Hanemann, PhD, Agricultural and Resource Economics, University of California, Berkeley, Giannini Hall, Berkeley, CA 94720.

This paper addresses three main questions: 1) what determines households’ perceptions of risks to an asthmatic child, 2) what averting and/or mitigating actions do households take, and 3) what is the estimated willingness to pay for reduction in asthma morbidity using a revealed preference approach. The study population includes children ages 6-10 with clinically diagnosed asthma, residing in a section of Fresno County, California.

We use the information from a detailed household survey and epidemiological data to estimate the household’s health production model. The marginal WTP for a reduction in pollution is estimated using observable costs of household behavior, and the non-marginal WTP is estimated using the utility function that is recovered when one combines the observed demand functions for mitigating and averting behavior together with the health production functions. An important contribution of this study is that our surveys on households provide information on households’ risk perceptions, their averting and mitigating behavior, the costs of such behavior, and the households’ evaluation of effectiveness of their actions. Our estimation therefore does not rely on proxies for perceived risks and does not assume households perfectly predict risk.

The high quality of data from our collaboration with an existing epidemiological study allows us to estimate the socio-economic correlates of risk reducing behavior. Thus our estimates both provide information on the benefit of reduced asthma morbidity caused by pollution reduction and how this benefit is distributed over racial/ethnic groups in the study area.

Learning Objectives: At the conclusion of the session, the participant will be able to

• Describe the standard economic model of a household's health production.
• Evaluate studies on valuing human health, particularly childhood asthma.
• Articulate the role of household risk perception on risk reducing behavior.

Keywords: Air Quality, Asthma

Presenting author's disclosure statement:
I do not have any significant financial interest/arrangement or affiliation with any organization/institution whose products or services are being discussed in this session.