Contingent Valuation and Social Choices Concerning Public Goods : An Overview of Theory, Methods and Issues
In: Revue d'économie politique, Band 117, Heft 5, S. 655-674
ISSN: 2105-2883
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In: Revue d'économie politique, Band 117, Heft 5, S. 655-674
ISSN: 2105-2883
In: Journal of benefit-cost analysis: JBCA, S. 1-23
ISSN: 2152-2812
Abstract
Public sector allocative decisions should reflect, as far as possible, the preferences of those affected by the decisions. Conventional benefit–cost analysis (BCA) will simply aggregate individuals' private willingness-to-pay (WTP) over all affected individuals to estimate the total benefits of a policy that delivers a public good. Given the nature of a public good, it is not unreasonable to consider that an individual may have altruistic preferences over the consumption of the public good by others. In this paper, we set out the theoretical underpinnings for a new citizen-based WTP, informed by political philosophy. Our model extends the standard social utility model (Bergstrom, 2006) of WTP for a public good when individuals are altruists by incorporating a Veil of Ignorance (VoI; Harsanyi, 1955). Our findings show that our WTP (Citizen) correctly includes altruistic as well as distributional preferences of individuals in society into WTP for use in a BCA. When WTP (Citizen) are aggregated for use in a BCA, equal weight is given to each individual's preference and the BCA will correctly identify potentially Pareto-improving projects in a consistent manner.
In: Risk analysis: an international journal, Band 44, Heft 3, S. 536-552
ISSN: 1539-6924
AbstractThe impact of climate change on human health was identified as a priority for the UN COP26 conference. In this article, we consider climate‐induced changes to mortality risks and how to incorporate these formally in the policy appraisal process. In the United Kingdom (UK), the Value of Statistical Life (VSL) is used to monetarize the benefits of policies to reduce mortality risks but it remains an open, empirical question as to whether the current VSL (£2.14 million per fatality prevented, December 2021 values) for traffic accidents should be applied in other contexts without any modification and particularly for extreme weather event fatalities. Using a representative sample of the UK population, we aim to estimate and better understand the trade‐offs people make when comparing mortality risks, drawing on psychological insights from construal level and regulatory focus theories. We design a stated preference survey using a relative valuation framework with nonmonetary, risk–risk trade‐off questions between extreme weather event and traffic accident mortality risks. We find evidence of an extreme weather event risk premium of 1.2–1.6 (implying a climate‐related VSL of £2.52–£3.41 million). We also find that participants who are psychologically close to climate change (based on construal level theory), weigh reducing extreme weather event mortality risks almost two times that of reducing traffic accident mortality risks.
In: Journal of risk and uncertainty, Band 45, Heft 1, S. 1-24
ISSN: 1573-0476
In: Applied Economics, Band 41, Heft 27, S. 3561-3569
Hypothetical Contingent Valuation (CV) Surveys used to elicit values for environmental and other public goods often employ variants of the referendum mechanism due to the cognitive simplicity and familiarity of respondents with this voting format. One variant, the double referendum mechanism, requires respondents to state twice how they would vote for a given policy proposal given their cost of the good. Data from these surveys often exhibit anomalies inconsistent with standard economic models of consumer preferences. There are a number of published explanations for these anomalies, mostly focusing on problems with the second vote. This paper investigates which aspects of the hypothetical task affect the degree of non-demand revelation and takes an individual-based approach to identifying people most likely to non- demand reveal. A clear profile emerges from our model of an individual most likely to non-demand reveal as one who faces a negative surplus i.e. a net loss in the second vote and invokes non-self interested, non-financial motivations during the decision process.
In: Journal of risk and uncertainty, Band 36, Heft 2, S. 125-138
ISSN: 1573-0476
In: Revue d'économie politique, Band 117, Heft 5, S. 781-794
ISSN: 2105-2883
Test de validité des stratégies de réponses aux risques terrifiants Cet article rapporte les résultats d'un test de validité d'une procédure développé pour explorer l'impact du contexte et des risques de base sur le taux de substitution marginal des individus entre richesse et risque de mortalité à travers différents contextes, en utilisant une méthodologie de risk-risk trade-off. L'analyse de ces interviews qualitatifs montre que l'effet du contexte est différent pour différents individus. Pour quelques individus le contexte n'avait presque aucun effet, ces individus se focalisant principalement sur leurs risques de base, tandis que pour d'autres il avait un effet considérable sur leur trade-off entre les risques. Notamment, seule une minorité décrivait une stratégie cohérente avec la maximisation de l'utilité espérée. Ceci a des implications importantes sur l'utilisation des mesures de risk-risk trade-off et des consentements-à-payer pour la réduction de mortalité dans les analyses coût-bénéfice.
In: Journal of risk and uncertainty, Band 51, Heft 1, S. 1-21
ISSN: 1573-0476
In: Journal of risk and uncertainty, Band 41, Heft 3, S. 195-218
ISSN: 1573-0476
In: Journal of risk and uncertainty, Band 68, Heft 1, S. 1-23
ISSN: 1573-0476
AbstractAs climate variability is increasing, extreme events such as temperature fluctuations are expected to become more frequent. Low- and middle-income countries (LMICs) are especially vulnerable to heat-related variability and its ensuing impacts on mortality. Therefore, there is an urgent need to understand how citizens in LMICs trade-off climate-related mortality risks with other risks such as traffic accidents, and what values they place on reducing such risks. As populations in LMICs are income-constrained, we adopt a non-monetary, risk-risk trade-off (RRTO) valuation method instead of the standard willingness-to-pay stated preference-based approach. We estimate the resulting risk premium for heatwave-related mortality risks through an adapted double-bounded, dichotomous choice approach to establish whether, on average, people value avoiding these risks more compared to reducing traffic risks. Using a sample of over 2,300 individuals from across seven states in India, a country with one of the highest heat-related mortality globally, we estimate the heatwave risk mortality premium to be between 2.2–2.9, indicating that on average, individuals weigh reducing heatwave-related mortality risks more than two times that of reducing traffic accident mortality risks. Based on a standard benefit transfer methodology for LMICs, this premium translates to a Value of Statistical Life (VSL) of USD 0.37–2.61 million for India.
In: Journal of risk and uncertainty, Band 62, Heft 2, S. 113-135
ISSN: 1573-0476
AbstractIn this paper we test the efficiency of family resource allocation in three-generation households. Understanding how the so-called "squeezed middle" generation allocates resources towards the children and grandparents in the household will be increasingly important as populations age, and more elderly people become dependent upon their relations for financial support. Despite a large literature on household resource allocation in two-generation households (parents and children), to the best of our knowledge ours is the first study that includes the third generation. We present a theoretical model and conduct a discrete choice experiment in the context of reductions in the lifetime risk of developing coronary artery disease to verify the efficient resource allocation hypothesis. The data is obtained from a large sample of the Polish population. The sample consists of the middle generation members of three-generation households and hence WTP represents household value from the perspective of the "squeezed middle" parent. The results imply that household resource allocation is efficient. This has implications for understanding the likely response to government financial support aimed at supporting elderly people and their families.
In: Public choice, Band 185, Heft 1-2, S. 1-19
ISSN: 1573-7101
In: Environmental and Resource Economics, Band 38, Heft 4
SSRN
In: Journal of risk and uncertainty, Band 33, Heft 3, S. 165-182
ISSN: 1573-0476
In: Journal of risk and uncertainty, Band 58, Heft 2-3, S. 245-262
ISSN: 1573-0476