Averting Behavior Methods

Averting behavior refers to actions taken to defend against environmental or other hazards, whether by reducing exposure to hazards or by mitigating adverse effects of exposure. This chapter examines how information on averting behavior can be used to improve nonmarket valuation. The chapter describes the history, theoretical foundation, and empirical application of averting behavior methods. These methods support estimation of economic benefits of public policies, especially those that reduce morbidity or mortality, in a way that is consistent with utility maximization and is based on observable behavior. The chapter: (1) shows how ignoring averting behavior may cause an invalid measurement of physical and economic damages of pollution or other hazards, and how controlling for averting behavior may improve welfare measurement; (2) explains several ways of using information on averting behavior to estimate the benefits of environmental improvement; (3) provides a simple empirical illustration; and (4) argues that the validity of welfare measurement using averting behavior methods depends on how the challenges of joint production, unknown prices of averting actions, and identification of the effects of pollution and averting behavior are met.