This paper examines the criticism of contingent valuation put forth by Blamey, Common and Quiggin (Australian Journal of Agricultural and Resource Economics, 1995, vol. 39, pp. 264–288). They argue that households have consistent preferences over private goods but not jointly consistent preferences over public and private goods and, hence, contingent valuation cannot uncover meaningful responses for the valuation of public goods. In this paper we argue that the motives that are manifested in choices for public goods can be explained in two ways. One is the model of the citizen, proposed by Blamey et al. (1995). The second is a model of neoclassical preferences with altruism. Given these alternative and competing explanations of choices for public goods, what matters is whether they imply differences in willingness to pay for public goods. We provide statistical evidence from a contingent valuation study of the control of deer in the USA that there is no difference in willingness to pay between those who profess ‘citizen’ or altruistic preferences and the rest of the presumably purely private respondents.

Economists have viewed the presence of externalities and other market failures as leading to a private equilibrium that would not be Pareto optimal. In the exploitation of common-pool resources, especially biological resources, this would lead to the much-discussed 'tragedy of the commons'. A challenge to this traditional view has emerged from a careful study of the theory and practice of the exploitation of common-pool resources. The existence of a social norm may provide an individual with information on the extent of external costs associated with a behavior, and thus provides an imperfect means of internalizing the external costs. In this paper we propose an evolutionary model of compliance that allows for the existence of a social norm. The impact of the social norm on public policy towards externalities is examined.

The gap between willingness to pay (WTP) and willingness to accept (WTA) has previously been studied by searching for evidence of substitutability (the neoclassical hypothesis) or status quo bias, testing for neoclassical versus psychological theories of preferences. We study the gap differently, asking whether the observed pairs of WTA and WTP are consistent with neoclassical preferences. We use Sugden’s [Alternatives to the neoclassical theory of choice, in: I. Bateman, K.G. Willis (Eds.), Valuing Environmental Preferences: Theory and Practice of the Contingent Valuation Method in the US, EU, and Developing Countries, Oxford University Press, Oxford, pp. 152–180, Chapter 6] result, showing that the effect of income on WTP can be approximated from information on the ratio WTA/WTP. Drawing inferences from a meta-analysis of 201 WTA/WTP ratios, we conclude that the data are not consistent with neoclassical preferences.

Willingness to accept (WTA) is usually substantially higher than willingness to pay (WTP). These constructs have been studied for roughly 30 years and with a wide variety of goods. This paper reviews those studies. We find that the less the good is like an “ordinary market good,” the higher is the ratio. The ratio is highest for non-market goods, next highest for ordinary private goods, and lowest for experiments involving forms of money. A generalization of this pattern holds even when we account for differences in survey design: ordinary goods have lower ratios than non-ordinary ones. We also find that ratios in real experiments are not significantly different from hypothetical experiments and that incentive-compatible elicitation yields higher ratios.

Over the past two decades, the marketing of fish has recognized the importance of quality. Yet empirical analysis of market transactions could give us little insight into the value of different qualities of fish because market data are typically aggregated. We exploit a dataset on the auction price of tuna sold in Hawaii to estimate a hedonic model. The model provides empirical estimates of price increments due to species, quality of the fish such as size or fat content, method of handling, and market conditions. The empirical results are also used to estimate price flexibilities for landings in Hawaii.

A Cournot model of investment is used to characterize the pre- and post-buyback investment equilibrium for vessels operating in a total-allowable-catch-regulated fishery. Welfare effects-the net welfare gains or losses and the distributional effects-that may be expected from vessel buyback programs are identified. Net welfare effects depend on the ability of remaining vessels to replace buyback capital, the speed of capital replacement, and capital investment irreversibility. Net welfare effects are likely to be positive only under exceptional technological and capital-market conditions. A brief review of the British Columbia Pacific Salmon Revitalization Plan is presented to anchor the theoretical model.

We show how nonmarginal benefits from higher drinking water quality can be measured doing a standard welfare analysis, where the parameters for the analysis are obtained through a nested logit model structured according to the defensive inputs available for drinking water treatment.

The idea that preferences are only revealed by real incentives is deeply embedded in economists' worldview. Consequently, evidence from hypothetical experiments has not readily permeated economic thinking. One method for determining whether hypothetical experiments provide useful information about preferences is to compare them to similar real-goods experiments. This study looks at responses elicited by three real experiments. We examine the proportion of responses that meet a series of criteria that range from a broad appeal of plausibility to a narrow restriction based on quasi-concavity of preferences. We argue that these proportions are unreasonably low.

This paper introduces household labor market choices into the demand for recreation, showing that the opportunity cost of time-wage rate connection is severed when severed household members have the opportunity to participate in the labor market fixed wages. An application of recreation demand for households in New Bedford Massachusetts, shows that the recreation demand models and estimates of consumer surplus are sensitive to household labor market choices. (Q26).

We find that prospect theory behavior is significantly more prevalent than utility theory behavior in experiments involving multiple, real items. In the experiments, subjects were endowed with three items and asked the minimum payments they required to be willing to return one, two, or three of them. Our key observation is that prospect theory implies concavity of compensation demanded, whereas utility theory implies convexity. We examine whether the compensation demanded is convex or concave in the number of items returned. ( JEL C91)

The evolution of strategies to improve the quality of water in the Chesapeake Bay, has resulted ill a set of policies known as the Tributary Strategies. These policies require a reduction of nutrients of 40 percent from a 1985 benchmark level. The 40 percent reduction is, in general, applied to all tributaries. We argue that this strategy imposes two kinds of deadweight losses on society. First it is well known? that a strategy of uniform reductions does not achieve a target of pollution reduction at least cost IA;hen the soul ces of the pollutant ave heterogeneous in costs, as they surely are for tributaries. Second in the ease of tributaries, the technical condition of equal mixing is not met, so that equal reductions in nutrients do not contribute equally in terms of benefits fi om improved water quality in the Bay. We develop a model to illustrate these points. The model is then extended into a political economic context to explore why the tributary strategies were "agreed" upon. Finally, we use current water quality data associated with Maryland tributaries to explore the results of the strategies to date.

Traditional referendum models of contingent valuation with linear utility functions and additive errors have troubled researchers because they routinely predict negative willingness to pay. We explore solutions to this problem, including parametric models and the Turnbull empirical distribution estimator of willingness to pay exploited by Carsonet al.We show that there are closed form solutions for estimates of the empirical distribution function from the Turnbull likelihood maximization problem which correspond to the self-consistency algorithm proposed by Turnbull and the pooled adjacent violators algorithm (PAVA) described by Robertson, Wright, and Dykstra and implemented by21. Further, a lower bound estimate of willingness to pay and the associated variance can be calculated by hand. The Turnbull estimator solves the problem of estimating negative willingness to pay without resorting to ad hoc distribution assumptions. It is shown that central tendency measures of willingness to pay from parametric models are sensitive to the assumed distribution, while the lower bound Turnbull estimate is robust across distributions.

In this paper we develop a count data model for consumer demand which explicitly allows for a large number of zero observations for the dependent variable, and separation of the participation versus quantity decisions. The advantages of the model over traditional censored and count demand models are brought out, and the appropriate consumer surplus measures are derived. By introducing a random error term into the traditional count model demand function, the appropriate measure of expected consumer surplus for count models is derived. The model is illustrated using a recreational survey of the general population.

The budget-constrained random utility model (RUM) gives utility-consistent measures of welfare, but requires the length of the planning period be specified. An alternative is to treat the RUM probabilities as behavioral and calculate consumer surplus. This paper shows that such calculations lead to the same welfare measures as RUM calculations. The paper provides support and an alternative justification for the standard welfare measured.

The logic of measuring the economic loss from pollution events is compelling. Yet when losses occur in the form of nonuse values, the contingent valuation method (CVM) is the only satisfactory approach to measuring the damages. The Ohio decision affirmed the validity of nonuse values and the role of contingent valuation in measuring these values. This decision, combined with the on-going practices of economists, establishes contingent valuation as an acceptable method of measuring damages. Challengers to CVM bear the burden of proving CVM unreliable. Cummings and Harrison argue that the Ohio court might have made different decision had they considered all of the available evidence on CVM. They assemble conceptual arguments and empirical evidence in their attempt to prove the unreliability of the CVM. The empirical evidence from CVM is weak but it is sufficiently systematic so that one cannot argue that CVM responses are purely random. In the absence of an alternative hypothesis about what respondents do when they answer CVM questions, it is reasonable to accept CVM of economic damages.

Journal Article Public Goods as Characteristics of Non-Market Commodities Get access N. E. Bockstael, N. E. Bockstael University of Maryland Search for other works by this author on: Oxford Academic Google Scholar K. E. McConnell K. E. McConnell University of Maryland Search for other works by this author on: Oxford Academic Google Scholar The Economic Journal, Volume 103, Issue 420, 1 September 1993, Pages 1244–1257, https://doi.org/10.2307/2234250 Published: 01 September 1993

This paper compares, via simulation, the performance of the multinomial logit and hedonic models in estimating consumer preferences for product attributes. We ascribe preferences over the attributes of houses to a population of consumers, and, by having them bid for a set of houses calculate equilibrium prices. The resulting data are used to estimate the two models.We find that the gradient of a linear Box-Cox hedonic price function estimates marginal attribute bids at least as well as a linear logit model, although the difference between the two is small when some variables are not observed or are replaced by proxies. The logit model, however, outperforms the hedonic model in valuing non-marginal attribute changes. This is true when the researcher knows the true form of consumers' utility functions and when the utility function must be approximated.

The standard travel cost model has treated on-site time ambiguously over the years. This paper shows how to handle on-site time by exploring the implications of two assumptions in the travel cost model: first, people choose the amount of time that they spend on a site, and second, the time spent on-site is exogenous. This paper uses a duality result to show that when on-site time is chosen, the standard travel cost demand function takes a particularly simple form. With slight modification, standard estimation and welfare calculations continue to hold.