Development of Economic and Mathematical Tools for Estimating the Cost of Living Taking into Account the Decreasing Marginal Willingness to Pay for the Reduction of an Additional Unit of Death Risk

The research is aimed at the development of economic and mathematical tools for estimating the value of statistical life (VSL) considering the decreasing marginal willingness to pay for the reduction of an additional unit of risk. The relevance of the work is due to the active introduction of approaches to the cost of living estimation based on the conditional estimate of willingness to pay (WTP) in the practice of assessing the socioeconomic consequences of managerial decisions. The research problem is the disproportionate change in willingness to pay in response to changes in the value of mortality risk reduction, which creates an overdependence of the resulting estimates on the elements of the study design. The developed author's model of life cost estimation makes it possible to consider the nonlinearity of the relationship between the willingness to pay and the value of the considered risk reduction, which allows, among other things, to reduce the risks of potential overestimation of the obtained results, to increase their accuracy, stability and reproducibility. According to the results of the constructed econometric models, an increase in the value of the reduction in the risk of death by 1.0 % is accompanied by an increase in the willingness to pay by 0.2 %, which confirms the hypothesis of the effect of diminishing marginal utility. The willingness to pay for reducing the risk of death by 25 per 100 thousand people is equal to 786.3 rubles, while at the risk level of 50, 100, 150 and 200 per 100 thousand people ‒ 910.16, 1 053.53, 1 147.65 and 1 219.49 rubles, respectively. The estimate obtained on the basis of the proposed author’s model is 14.12 mln rubles, whereas, according to the standard approach, it lies in the range from 7.3 to 31.7 mln rubles and more, depending on the study design.