THE VALUE OF HUMAN LIFE: WILLINGNESS TO PAY FOR THE PROVISION OF LIFE-JACKETS AT THE SARAWAK...

I. INTRODUCTION

The ever increasing number of boats plying the Sarawak River, due to the ever increasing demand for cheaper transportation (Anonymous, 2001), has created a recipe for disaster (Anonymous, 2001). A number of express boat (passenger carrying fast boats) collisions have occurred, causing loss to life and limb (Anonymous, 1999b) even though there have been numerous warnings by the authorities (Anonymous, 1997). Express boats have been described as 'floating coffins' although they are also said to be safe (Yong, 1999).

Nevertheless, to many users, the provision of life-jackets to those who use the Sarawak River as a form of transportation is a must and has recently been passed as law in the state. It is a logical step to be taken in the issue of public safety as by having life-jackets, the loss of life in case of accidents can be limited. On the other hand, the provision of life-jackets costs money and therefore most likely the extra cost will be pushed to the consumer, who is already burdened by the cost of travel. Consumers, on the other hand, perceive the provision of such safety devices as a public good, which is owed to them and is to be provided by the boat operators. This article explores this issue from the standpoint of how much the consumer is willing to pay for the provision of life-jackets as a substitute measure for the value placed on the individual's life.

The study applied the dichotomous choice of Contingent Valuation Method (CVM) to users of express boats at the Kuching Wharf, who were sampled randomly by enumerators. There have been previous studies that have utilized this method, in many areas. These include hunting (Loomis, Pierce, & Manfrede, 2000), air quality (Carlsson & Johansson-Stenman, 2000), water floridation (Shackley & Dixon, 2000), and even recreational pursuit (Hayes & Hayes, 1999). As such, this method will be used in this study, to measure the WTP for the provision of life-jackets.

This article is presented in the following sections. The next section will discuss the place of study and provide background literature as well as the theoretical framework for the study. This is followed by the methodology used in the study. The section after this will detail our findings which are then discussed. The article is then concluded with thoughts for further studies and issues of safety.

II. LITERATURE REVIEW

Location of the study

Sarawak is a state that is intersected by wide flowing rivers that have traditionally been used as a means of transportation. In Sarawak, inland water transportation is not a new topic because of its contribution and influence to the historical civilization progress and development. Rafts, boats, ships, have their own histories in Sarawak, connecting every era of civilization in the state. The geographical structure of Sarawak makes riverine transportation important. It is a fundamental means of generating timber and timber-based products, trade and commercialization of small towns, as well as a tourism bonanza for the state. This riverine road is an indispensable method of travel in the state.

The Kuching Wharf is located at Pending, Kuching, Sarawak. It is the hub of express boat services, cargo boat services, as well as general riverine and coastal boat services to other areas in the state, including Sibu, Bintulu, Miri, and Lawas. The express boats ply the various areas in the state, connecting small towns such as Kapit and Marudi to each other and to major towns such as Kuching and Sibu. It is a major transportation sector in the state and is heavily used by consumers (Anonymous, 1999a).

Boating and safety needs

It is evident that Sarawakians' utilize express boats as a means of transportation (Anonymous, 1999a) even though there have been horrendous accidents and negative stigma attached to these boats (Anonymous, 1999b; Yong, 1999). Nevertheless, it is an affordable means of transport that covers nearly all the state and reaches the small riverine towns of Sarawak. The issue of safety is notably placed second to the issue of cost.

Nevertheless, the issue of safety is important. Data from the United States show hefty injury and death numbers from boat accidents. There have been 7,913 boat accidents in the USA, with 4,315 injuries and 734 deaths (USDT, 1999). The numbers are not an issue, the cause is. Most of these accidents, as high as eighty five percent, are due to operator-controllable factors. These include inattention, recklessness, carelessness, inexperience, excessive speed, and no lookout (Donious, 2001). These accidents are avoidable and not inevitable (Peterson, 2001).

Another issue is operator experience, especially that which is gained from safety courses. If operators are not trained they are five times more likely to end up in an accident (Thiede, 2001). This indicates that there is a heavy responsibility attached to the operators of express boats to attend safety training courses and to apply such knowledge in their work.

From the consumer standpoint, the apparent ease with which accidents can occur due to the operator's inability is shocking. However, consumers are not willing to purchase safety equipment, and if they do, they purchase the wrong or unsafe equipment (Scrudato, 2001). Studies have shown that the preparation and use of life-jackets will prevent seventy percent of boating fatalities (Thiede, 2001). Nevertheless, the costs of life-jackets are prohibitive for consumers, especially if their use of express boats is limited. Thus, the need for the supply of life-jackets; by either the operator, government, or by law passed, requiring operators to make available life-jackets.

Methodological issues

The issue of placing value on human life is fraught with many controversies. This study does not aim to place a value on human life but looks instead at how consumers value their own life when faced with a choice of safety equipment use or none. There are two approaches, the Hedonic-wage and the Landefeld and Seskin's human capital / willingness-to-pay (WTP), which estimate the value of a life statistically. The hedonic-wage approach estimates it costs about $5 million to save a life, while the Landefeld and Seskin approach lists the value at $15,000 to $1,979,000 in 1995 dollars (Anonymous, 1996). The use of WTP is questioned by other authors who state that the calculation of the value of human life on the basis of willingness-to-pay (WTP) or willingness-to-accept (WTA) is flawed (Granville, 1995).

The supply of any goods incurs cost, which is most often than not, passed on to the consumer. The question here is' not whether the government should require express boat operators to make available life-jackets but what increase in price are consumers willing to pay for the provision of this service. Do consumers equate the provision of life-jackets as an outward act of valuing their life and if so are they willing to pay the extra cost associated with their peace of mind.

Any effort to pay for the provision of a perceived public good brings about the issue of utility to the consumer (Dupuit, 1968). It is clear that economic value is determined by the WTP for the utility even though the product is extra to what the consumer requires (Bishop & Heberlein, 1979). Generally the difference between the price that one is willing to pay and the price that one has to pay describes the utility of the product. Therefore, it stands to reason that if the price goes higher, the utility is lowered. In the case of express boats, it is now favored as its price is low. However, with the provision of life-jackets as a must, cost increases and the price of travel will increase, thus lowering the utility to the consumer.

The goal of consumption is utility maximization. This is restrained by certain factors such as income and price. Demand structure can be produced when an income structure and price structure are known. This is essential for the CVM which relies on surveys containing hypothetical valuations that may create a structure of price and value, especially for goods that cannot be directly valued by the market (Bishop, Heberlein, & Kealy, 1983; Cameron & James, 1987; Nik Mustapha, 1993; Scarpa, 2000; Shackley & Dixon, 2000). The method is simpler, flexible, and simple to administer as respondents are not involved in complicated and convoluted bidding schemes or required to know the exact value of the resource (Cummings, Brookshire, & Shulze, 1986; Rendall, Ives, & Eastman, 1947). The respondents just need to answer 'yes' or 'no' to the monetary value offered in the questionnaire. In addition, the CVM can be used to bring forth many other values such as the total preservation value, which includes both use and non-use components (Bishop & Heberlein, 1979; Bowker & Stoll, 1988).

In this study, we utilized a direct analysis of individuals' WTP for the provision of life-jackets in express boats plying the Sarawak River. The questionnaire was designed to measure the personal WTP of each respondent for a product that is generally unobtainable by themselves. WTP here is portrayed by a demand curve, which measures real satisfaction. In this case, the consumer surplus represents the actual benefits that users or express boats obtain from their use of an express boat that provides them with a life-jacket.

In this study, we used the provision of a life jacket as a product attribute. The dichotomous choice survey asked respondents if they would pay a certain amount of the price to obtain better facilities such as the provision of life-jackets and better peace of mind. This format is called the dichotomous format as respondents just answer either 'Yes' or 'No' to the given questions (Bowker & Stoll, 1988; Nik Mustapha, 1993; Rollins, 1997).

The study also notes the Logit and Probit models (Seller, Chavas, & Stoll, 1986), frequencies, regression, and correlation in order to obtain an overall picture of respondents and their WTP for the provision of life-jackets. The Logit and Probit is used as an alternative for regression and the model guarantees that probabilities from the Logit model will always lie within the logical bounds. The Probit model is related to the cumulative normal probability function and it solves the problem of estimating alpha and beta while deriving information of the index Z.

III. METHODOLOGY

Description of the study

This study was set out in the manner to determine the price respondents were willing to pay for the provision of life-jackets on express boats plying the rivers of Sarawak. Respondents were users of the express boat service and were interviewed at the Kuching Wharf. The study aimed to measure the use of express boats, indication of willingness to pay for the provision of life jackets, and the amount willing to pay.

Questionnaire design

An exploratory discussion with users of express boats was conducted by the authors to note their views and to corroborate the notions brought about by the literature. A Bahasa Malaysia version of the questionnaire was constructed in three steps using the back-translation method (R. T. Green & White, 1976). First, the English version was translated into Bahasa Malaysia. Secondly, a Bahasa Malaysia-speaking colleague, who had not seen the English version of the questionnaire, translated the questionnaire back into English. Discrepancies between the versions were identified and corrected. Special attention was given to the translated version so that it would be as simple and easy to understand. Third, the Bahasa Malaysia questionnaire was pretested on a sample of respondents by using a personal interview format to collect first hand feedback on unclear words and questions.

The questionnaire was presented to respondents in Bahasa Malaysia. It had two sections. The first section consisted of questions designed to obtain information on the use of express boats, willingness to pay, and the amount that the respondent was willing to pay. The second section of the questionnaire obtained demographic data of the respondents.

Field work

The study took place at the Kuching wharf over a period of two months. An enumerator was hired for the field work phase of the study and trained by the authors on how to collect data from respondents. Each of the respondents was informed of the purpose of the study, as well as the purpose of the provision of life-jackets. A total of 600 respondents were obtained.

IV. FINDINGS

Socio-economic and demographic characteristics of respondents

Table 1 depicts respondent's socio-economic and demographic situation. Most of the respondents have no income, and are students, housewives, or unemployed. For those that do have an income, over three quarters of them earn below RM1500 a month. Most respondents are still young, and are in their early thirties. They are educated to at least a secondary education. The number of respondents also indicates a well balance of users of express boats by gender.

Use of express boats

Most of this study's respondents, 44 percent, have not used an express boat in the past year. 33.4 percent have used an express boat one to five times in the past year. This figure then steadily decreases, where only 2.6 percent have used an express boat for six to 10 times, 9.7 percent for 11 to 30 times, and 10.3 percent for more than 30 times in the past year while 1.7 percent of respondents have used the express boats for 60 times in the past year.

WTP for the provision of life-jackets

The study found that 73.2 percent of respondents were willing to pay for the provision of life jackets. However, the amount they were willing to pay was varied, from as low as RMO. 10 to as high as RM40 while 26.8 percent were not willing to pay any extra for the provision of life jackets. However, when asked again if they would be willing to pay, 28% still said no, but the remainder were willing to pay between RM0.05 and RM30.

The maximum likelihood estimates of the specification for Logit and Probit models are estimated using LIMDEP, version 7.0 (W. H. Green, 1995), and the means for WTP were calculated using MATEMATICA, version 2.2 (Sherlock, 1993). The results are shown in Table 2. The calculated coefficients values for WTP are listed in Table 3.

The initial estimation of the model using all the socio-economic and demographic characteristics of the respondents as independent variables reveals that all other variables were insignificant except for income and price. Income shows a significant and positive relationship to WTP for the provision of life-jackets. Price is also significant, reflecting the nature of the respondents socio-economic situation (mostly with no income, and those with income have a low income).

The chi-square statistics show that the model is highly significant. The value of McFadden pseudo R-square is 0.1209 and 0.1242 for Logit and Probit models respectively. The percentage of right prediction is 86.25 percent for both models. The price and income factor in both models are significant at either 10 or 1.0 percent. There are only slight differences in the Logit and Probit models in this study. However, it was surprising that regression findings indicate age as a significant variable (0.000) with an R square of 36 percent and an adjusted R square of 28 percent.

Table 3 details the calculated coefficient values for the Logit and Probit models. The WTP coefficient for Logit is RM8.58 and for the Probit is RM7.48. As previous studies have shown that WTP from the Logit model is reliable (Nik Mustapha, 1993), this study then takes the Logit coefficient value of RM8.58 as the conservative WTP for the provision of life-jackets on express boats in Sarawak.

A set of correlations between socio-economic and demographic factors against WTP factors was also carried out. It is clearly shown that education and income are significantly negatively correlated to how often respondents use the express boat service. As for WTP (yes), age and income are significantly positively correlated while occupation is significantly negatively correlated with it. Age seemed to be an important factor for those that were not willing to pay, as it was significantly correlated.

V. DISCUSSION

It is clear from the study's findings that most users of express boats in Sarawak are from the lower middle class section of the society. The socio-economic findings of the study support this statement by showing a high rate of express boat users with an income lower than RM1500 a month, with only secondary education. The demographics also show a higher number of young users. Another issue to note is based on the respondent's socio-demographics as well as newspaper reports that most of the express boat users are light users, who use the express boats mainly during holidays (Anonymous, 1999a). This socio-economic and demographic data indicate a situation that has an impact on WTP for the supply of life-jackets as well as the amount that respondents are willing to pay.

When the socio-economic and demographic is seen in the light of the amount respondents are willing to pay, one clearly sees that the value of life, peace of mind, and importance of the provision of life-jackets are minimal. Respondents don't equate the provision of life-jackets with the value of life and peace of mind. They see their travel as a one-off, limited usage, and therefore not likely to encounter any danger. This is shown by the paltry figure of less than RMl that nearly 50% of respondents were willing to pay. Less than 20% were willing to pay more than RM10.

One must remember that more than a quarter of respondents were not even willing to pay an extra cent for the provision of life-jackets. They are older and 'richer' but less likely to be willing to pay, but when goaded on the second time, tend to understand the value of life-jackets and have a higher figure for their WTP. For those that are young, the issue of cost is undoubtedly on their mind as they are not earning and their fare is paid by their family. Nevertheless they are WTP, but then the amount that they are WTP is small. Even those that are earning an income are from the lower bracket and cost is certainly an issue, as can be seen from Table 4. Again, the figure they are willing to pay is minimal and indicative of the reasoning that cost is more important than life.

Only three quarters of respondents were willing to pay for the provision of life-jackets and only with a small amount. This may also be due to the method of how the questions were framed. It has been found in previous studies that WTP for a longevity benefit is sensitive to the framing of the benefit, with respondents expressing higher WTP for the benefit expressed as a life expectancy gain rather than the risk reduction format (Morris and Hammitt, 2001). Life-jackets were seen as risk reducers and not life extenders.

The Logit and Probit models, regression, and correlation show the same picture. Price, income, and age are the most important factors that are to be considered when noting the WTP of respondents. Value of life is not directly associated with the provision of life-jackets. It is clear that respondents are not highly motivated to pay for life-jackets, as they are light users of express boats, young, and with a low income. This forces them to question the utility of life-jackets.

Nevertheless it is surprising to note that the coefficient values in the Logit and Probit models are quite high. This is true when compared to the average ticket price of RM20 to RM30 per trip, the socio-economic situation of respondents, and the demographics of express boat users. This high figure may indicate a consciousness of safety and willingness to pay for their peace of mind. Nevertheless, there is a nagging doubt by the authors that this high value may just be because of the recent large riverine accidents (Anonymous, 1999b).

However, if that is the case, then there is no better time for the government and express boat operators to act. Besides the provision of life-jackets, there could be more safety training for boat operators and safety campaigns for express boat users. The use of life-jackets has been shown to be effective and this must then be communicated to the end user. Therefore the increase in price that consumers are willing to pay can be used for such a purpose.

Safety regulation in boating activities is a long-term assessment and implementation that must be looked into by the Sarawak Government. The common view of respondents is that operators ignore passenger safety and even their own safety. Besides that, user's awareness of the importance of boating safety equipment must be encouraged. All parties such as government and private sectors must play their role in promoting awareness of the need for life jackets, training for boat operators, and constant surveillance of safety measures. In the USA, public and private sectors have come together to make such campaigns a success. The North America Boating Safety Campaign 2001 for example was conducted for four years.

VI. CONCLUSIONS

A detailed assessment of express boat user's thoughts on the issue of safety and the supply of life jackets could be conducted. This should be a qualitative study that takes into account express boat user's perceptions of safety as well as their views on what more could be done. This study did not look at express boat operators views and as such further studies could look into their views and WTP for the provision of life-jackets.

The rivers of Sarawak are vast and beautiful, providing means of transportation for over millennia. River transportation has burgeoned in the past decades to encompass even sea-going vessels. However, relatively few of its users are aware of any safety precautions or even the provisions of life-jackets in express boats.

The realization of self-protection, ease of mind from the dangers of the river and sea can be measured by how much an individual is willing to pay to preserve their lives by the provision of life-jackets. This study shows that as income increases, one's WTP also increases. It also shows that age is a strong indicator in the area of boat users, and that this factor plays an important role in the pricing and provision of life jackets. If a large portion of users are young with no income or relatively low income, the question of extra payment (higher price) reduces utility to the user, significantly.

As discussed, RM8.58 is the average WTP value. At present the average ticket price is between RM20 and RM30. If this extra amount could be collected for the provision of life-jackets as well as other safety measure, training, and promotion of safety, the current safety issues could be assisted and developed.

If the authorities were to collect this fund, they could engage in the promotion of boating safety, user safety on boats, as well as overall safety issues on the rivers of Sarawak. In addition, the funds could be used to train boat operators on the need for safety, safety methods, and safe boating. Nevertheless, the responsibility of safety does not only lie with the government, but also the user and operators.

Limitation

This research employed a convenience sampling method that obtained data from a specific group of individuals in a specific sampling frame. This form of data collection limits the generalizability of such findings. Therefore, the findings in this paper must be looked at in line with data from other studies in this specific area before any generalizations are made.

The authors also did not look at why respondents were willing to pay or not, only limiting to the amount that they were willing to pay for each factor studied. Discussion of such in the paper is based on the author's views, discussion with respondents, and previous studies.

Further Research

Among further research that can be carried out is to determine why respondents did not note the need for safety equipment. This may in turn explain what the specific triggers for the need of safety equipment are, which can then be used in promotional and advertising messages on safety. Further research can look at specific variables such as age, income, ethnicity, religion and others as a method of comparison. A further study can note if there is any differences in WTP when the terminology used for life-jackets refers it to life extending instead of risk reducing.