5 - You Bet Your (Dog’s) Life

Summary

In Chapter 5, we explain how a stated preference method, contingent valuation, is used to estimate the value of statistical dog life (VSDL). This shadow price is useful in cost-benefit analyses, included in regulatory impact analyses of rules that affect canine mortality risk. We explain how economists estimate the value of statistical life (VSL) and how to interpret it. We motivate the value of the VSDL with the melamine pet food disaster, which killed many dogs and cats and resulted in the Food and Drug Administration being given more authority to regulate pet food. The VSDL was estimated using a survey experiment presented to dog owners in a national survey. Respondents were asked about their willingness to pay for a reduction in the mortality risk that their dogs face from canine influenza. We describe the construction of the survey instrument and the experimental design, and then demonstrate how the statistical analyses of the resulting data can reduce behavioral biases that might reduce the validity of the results. We conclude by considering how the VSDL may be extended beyond regulatory analysis to tort and divorce law and public policy more generally.