factors influencing differences between survey and market based environmental value measures a unique us database combining survey and housing data is used to obtain household level stated and market based willingness to pay wtp measures to avoid living near landfills systematic differe

efficient mechanisms for bilateral trading we consider bargaining problems between one buyer and one seller for a single object the seller s valuation and the buyer s valuation for the object are assumed to be independent random variables and each individual s valuation is unknown to the other we characterize the set of allocation mechanisms that are bayesian incentive compatible and individually rational and show the general impossibility of ex post efficient mechanisms without outside subsidies for a wide class of problems we show how to compute mechanisms that maximize expected total gains from trade and mechanisms that can maximize a broker s expected profit journal of economic literature classification number 026

water markets market reform and the urban poor results from jakarta indonesia abstract roughly 20 of the eight million persons in jakarta receive water from municipal water connections to their homes remaining supplies are essentially private and include street vendors standpipes and wells the last of these an inexpensive but increasingly contaminated source in many areas an expansion of the network of in house connections is in progress but will take several decades to complete in the interim various strategies have been advanced to deal with persistent problems of access to good water by the poor this study examines the impacts of one such plan put to action the april 1990 deregulation measure permitting private homes with water connections to resell municipal water we present preliminary evidence that the primary social benefits of deregulation are the money savings and increased consumption by former vendor and standpipe customers in most respects the aggregate effect is equivalent to a costless expansion in the standpipe system with the difference on the supply side that significant transfers from vendors and standpipe operators to household resellers may occur

arbitrary values good causes and premature verdicts abstract this paper offers an alternative interpretation of the conclusions kahneman and knetsch propose based on two contingent valuation cvm surveys the evaluation argues that while framing is important to cvm estimates the design implementation and empirical findings reported from these surveys do not support their judgments moreover with the exception of temporal embedding conventional economic descriptions of individual behavior can explain the response patterns that they suggest are at variance with standard value theory

how should control theory be used to calculate a time consistent government policy we study different solutions to a simple one dimensional linear quadratic game with a large number of private agents and a government a time consistent solution is defined as a solution to the hamilton jacobi bellman equation i e as a policy for which the government has noprecommitment capability this solution is compared to a policy where the government has an instantaneous pre commitment i e an equilibrium in which the government has a period by period leadership in both cases we show how control theory should be applied to calculate the equilibrium and how to relate these equilibria to the differential game literature

political economic markets perts and pests in food and agriculture j i lyniversity of california berkeley jjept of agricultural and resource economic l working paper al cljdare i lorking paper 0 231 politic eco lic l rxets a d pests i j food l ti achiculture by per ts cordon c rausser ja nlnl tt junot tlon a riii ent st ticn giannini fou 1cl itiol1of ar ricultllrnj econo ll i cs july 11 w

agendas strategic voting and signaling with incomplete information the literature on agendas with sincere and strategic voting represents an important contribution to our understanding of committees of institutions and of the opportunities to manipulate outcomes by the manipulation of institutions that literature though imposes an assumption that may be unrealistic in many situations namely that everyone knows the preferences of everyone else in this essay we apply bayesian equilibrium analysis to show that the properties of agendas that others derive by assuming complete information do not hold necessarily under incomplete information first a condorcet winner need not be selected even if nearly everyone on the committee most prefers it second the two step theorem that any outcome reachable in n voting stages via some amendment agenda is reachable in two stages under sophisticated voting need not hold third nonbinding votes such as straw polls can critically affect final outcomes

what are households willing to pay for improved water access results from a meta analysis abstract although several factors contribute to low rates of access to improved water and sanitation in the developing world it is especially important to understand and measure household demand for these services one valuable source of information regarding demand is the growing empirical literature that has applied stated preference methods to estimate households willingness to pay wtp because it is difficult to generalize and support planning based on this scattered literature we conduct a meta analysis to take stock of the worldwide sample of household wtp for improved drinking water services using 171 wtp estimates drawn from 60 studies we first describe this sample and then examine the potential factors that explain variation in wtp estimates our results suggest that households are willing to pay between approximately 3 and 30 per month for improvements in water access specifically in line with economic theory and intuition wtp is sensitive to scope the magnitude of improvement in drinking water services as well as household income and stated preference elicitation method we demonstrate how our results can be used to predict household level wtp for selected improvements in drinking water access in regions with low coverage and find that private benefits exceed the cost of provision

ex ante consumer welfare evaluation in cost benefit analysis abstract public projects and policies are normally evaluated ex ante i e while consumers may still be uncertain about future prices income levels interest rates and preferences this paper extends the theory of ex ante consumer welfare evaluation by developing a 2 period model with multiple sources of uncertainty it provides insights into the influence of temporal uncertainty on the empirical measurement of ex ante willingness to pay

how to identify trust and reciprocity this paper uses a three games or triadic design to identify trusting and reciprocating behavior a large literature on single game trust and reciprocity experiments is based on the implicit assumption that subjects do not have altruistic or inequality averse other regarding preferences such experimental designs test compound hypotheses that include the hypothesis that other regarding preferences do not affect behavior in contrast experiments with the triadic design do discriminate between transfers resulting from trust or reciprocity and transfers resulting from other regarding preferences that are not conditional on the behavior of others decomposing trust from altruism and reciprocity from altruism or inequality aversion is critical to obtaining empirical information that can guide the process of constructing models that can increase the empirical validity of game theory

measuring the demand for improved urban sanitation services results of a contingent valuation study in ouagadougou burkina faso in developing countries there are few institutional mechanisms for the incorporation of demand information in the planning of public services as a result misjudgements about consumer preferences have often led to poor project design and performance the contingent valuation method which relies on direct elicitation of consumer preferences and willingness to pay has emerged as one approach to address this shortcoming the paper describes an application of the method to facilitate demand driven planning for provision of improved sanitation in ouagadougou burkina faso the results suggest that demand information about unfamiliar technologies can be successfully obtained and can serve as a useful input in the design of public services

valuation of landmass degradation using fuzzy hedonic method a case study of national capital region a hedonic model to determine the revealed willingness to pay for landmass of different suitability classes based on landmass functional characteristics obtained through subjective assessments is developed for the national capital region in india the inherent non specificity involved in subjective evaluation is minimized using fuzzy logic based regression technique the proposed fuzzy regression involves regression using central values of triangular fuzzy number and minimization of non specificity using linear programming the revealed willingness to pay for landmass of different suitability classes is used for valuation of disbenefits due to urban expansion on landmass of different agricultural suitability classes in national capital territory of delhi appropriate pricing policies to prevent the future inappropriate landuse practices are developed using the landmass valuation

estimating willingness to pay for improved water quality in the presence of item nonresponse bias this article deals with the problem of item nonresponse in contingent valuation surveys using a payment card method by applying a grouped data sample selection estimation technique that is capable of imputing the missing values conditional upon a respondent s decision to answer a willingness to pay question the advantage of the technique lies in its ability to utilize all of the information in the sample permitting a more efficient estimation in the presence of item nonresponse bias the major determinants of willingness to pay appear to be household income number of children education perception of existing water quality and identification with environmental issues copyright 2003 oxford university press

giving stated preference respondents time to think results from four countries previous studies have found that contingent valuation cv respondents who are given overnight to reflect on a cv scenario have 30 40 lower average willingness to pay wtp than respondents who are interviewed in a single session this time to think ttt effect could explain much of the gap between real and hypothetical wtp observed in experimental studies yet giving time to think is still rare in binary or multinomial discrete choice studies we review the literature on increasing survey respondents opportunities to reflect on their answers and synthesize results from parallel ttt studies on private vaccine demand in four countries across all four countries we find robust and consistent evidence from both raw data and multivariate models for a ttt effect giving respondents overnight to think reduced the probability that a respondent said he or she would buy the hypothetical vaccines average wtp fell approximately 40 respondents with time to think were also more certain of their answers and a majority said they used the opportunity to consult with their spouse or family we conclude with a discussion of why researchers might be hesitant to adopt the ttt methodology

comparative reliability of the dichotomous choice and open ended contingent valuation techniques abstract the comparative reliability of dichotomous choice and open ended contingent valuation methods cvm is evaluated by resurvey of the same households 9 months after their original survey test retest correlations on willingness to pay are statistically significant at the 1 level and range from 0 57 for the dichotomous choice cvm to 0 62 for the open ended cvm the test retest correlations were not statistically different between dichotomous choice and open ended cvm a likelihood ratio test for temporal stability of each method s willingness to pay functions indicates stability half of the time for both methods

contingent valuation and actual behavior predicting connections to new water systems in the state of kerala india in 1988 families in kerala state in india were surveyed to ascertain their willingness to pay for household connections to a piped water supply system in 1991 the families in these communities were surveyed again and their actual decisions recorded this article explores the validity of the findings of the 1988 study on the basis of actual behavior it looks at the question of benefit revelation did people behave as they said they would and it looks at the question of benefit transfer did people in one site behave as they were predicted to behave on the basis of the predictions of a behavioral model for a different site the data were also used to analyze the policy relevance of behavioral modeling coauthors are john briscoe bhanwar singh radhika ramasubban and ramesh bhatia copyright 1995 by oxford university press

valuing non market goods using contingent valuation abstract contingent valuation is a technique being developed by economists for the valuation of environmental commodities not traded in markets this paper discusses the major problem areas associated with this method of value estimation these comprise bias strategic hypothetical and design biases the discrepancy between willingness to pay and compensation demanded the aggregation procedure the choice of question format and non use values some evidence from comparative studies is reported and comments made on the accuracy of contingent valuation answers finally the conditions under which contingent valuation seems to operate best are set out

toward equitable and sustainable rural water supplies a contingent valuation study in brazil because many rural people are poor it is usually assumed that rural water supplies must be financed by government agencies it is now widely recognized however that many rural people can and will pay for improved water supplies and that sustaining and extending services depends on mobilizing this willingness to pay this article describes a study of willingness to pay for water in brazil the study shows that surveys of actual and hypothetical water use practices can provide policy relevant information on willingness to pay which is shown to vary according to household socioeconomic characteristics and the characteristics of the existing and new supplies of water in rural brazil tariffs for yard taps can be increased substantially before significant numbers of housebolds would choose not to connect to an improved system whereas provision of free water at public taps can protect the poor without jeopardizing the financial viability of the scheme billions of people in developing countries face daily problems in obtaining water for drinking cooking bathing and washing more than 1 500 million people 30 percent of the world s population are estimated to be without access to uncontaminated water and an unknown but large proportion have to spend hours daily to collect water briscoe and de ferranti 1988 churchill 1987 because the adverse consequences for productivity health and quality

valuing environmental commodities some recent experiments a general model of consumer behavior is proposed to assess six recent experiments that have attempted to reveal preferences for environmental goals each experiment used a mix of both the techniques and the theory of demand for non market commodities and each was designed to estimate a non market attitude associated with the environment and to analyze potential biases in the techniques the six cases show some consistency in results the linkage within the contingent market between the environmental attribute institutional setting and the bidding instrument must be realistic and accepted by the respondent to avoid biased results possibly the most important result is the replication of results using a traditional property value study and a contingent bidding approach all evidence obtained to date suggests that hedonic studies of property values or wages travel costs and survey techniques all yield values well one order of magnitude in accuracy 41 references 2 tables

bargaining in legislatures bargaining in legislatures is conducted according to formal rules specifying who may make proposals and how they will be decided legislative outcomes depend on those rules and on the structure of the legislature although the social choice literature provides theories about voting equilibria it does not endogenize the formation of the agenda on which the voting is based and rarely takes into account the institutional structure found in legislatures in our theory members of the legislature act noncooperatively in choosing strategies to serve their own districts explicitly taking into account the strategies members adopt in response to the sequential nature of proposal making and voting the model permits the characterization of a legislative equilibrium reflecting the structure of the legislature and also allows consideration of the choice of elements of that structure in a context in which the standard institution free model of social choice theory yields no equilibrium

estimating a socially optimal water price for irrigation versus an environmentally optimal water price through the use of geographical information systems and social accounting matrices this article develops a method for establishing water prices and their effects in order to provide policy makers an environmentally and socially optimal range of regional prices for irrigation water two prices are determined the environmentally optimal price of water is defined as the one that internalizes the environmental costs generated by agricultural consumption the social optimally price of water is defined as the one that maximizes levies on water for agriculture without affecting the regional economy the environmentally optimal price is calculated with an economic model built over a geographical information system gis that allows the economic quantification and valuation of the environmental cost of water in different basins the optimal price is calculated with a demand curve for irrigation water introduced into a social accounting matrix sam to observe if the regional economy can accept higher prices without affecting the regional gdp potential water prices are established ranging from prices that minimize the negative impact in the regional economy to those that totally internalize the environmental cost of water

reciprocity and resistance to comprehensive reform comprehensive reforms often fail despite being beneficial to society politicians may block comprehensive reforms in an attempt to form vote trading coalitions in which they benefit from a piecemeal reform at the expense of others because formal commitment devices for vote trading are frequently missing trust and reciprocity among legislators can play an important role for vote trading we investigate in a laboratory experiment whether legislators will impede comprehensive reforms in an attempt to form vote trading coalitions even if formal commitment devices for vote trading after reform failure are missing we find that open ballots allow for vote trading without commitment based on trust and reciprocity in turn legislators frequently reject efficient comprehensive reforms in such institutions

willingness to pay for improved water service in manaus amazonas brazil the 1 5 million residents of the city of manaus form the epicenter for economic activity and development in the amazon basin the current water treatment facilities were built when there were a mere 100 000 people living here the fifteen fold increase in population has made access to water a major public health concern families that can afford to buy bottled water do and those that can not are susceptible to water borne disease and illness at an ever increasing rate in order to determine how much citizens are willing to pay for universal access to water service in the home the university of amazonas center for environmental sciences has conducted a survey of over 1600 residents collecting information on current water needs health concerns household socioeconomic characteristics and from a contingent valuation cv experiment how much they would pay for access to improve water service in the home this paper makes use of the 1479 observations from four elicitation formats 1 open ended 2 open ended with a bpre qualifyingq statement 3 descending bid dichotomous choice and 4 ascending bid dichotomous choice results suggest that residents are willing to pay wtp more than r 12 us 6 12 per month

measuring the social value of local public goods an empirical analysis within paris metropolitan area a non linear hedonic model is used to estimate the implicit marginal prices of 17 local public goods in a paris suburban area on an original data set of some 8200 housing units the results reveal a robust effect of local public school quality measured both by the fraction of junior high school students that are at least two years behind grade level and the student teacher ratio on house prices it is observed that housing owners marginal willingness to pay for reducing commuting time is roughly similar for public transportation than for car transportation another noticeable result is the complete capitalization of local taxes at a discount rate of 3 5 an illustration of the potential usefulness of the results for cost benefit analysis is also provided

the effects of logrolling on congressional voting the theoretical public choice literature suggests that vote trading is an important determinant of congressional voting behavior yet empirical voting models do not allow for vote trading these models recognize that observed ideology may influence legislative behavior but do not correct for unobserved ideology this study devises new tests for logrolling and ideology the empirical model controls for logroll agreements and unobserved ideological interest via the correlation of unobserved variables the results reflect the presence of vote trading coalitions on some votes but not on others the results cast doubt on the importance of personal ideological interests of legislators copyright 1992 by american economic association

heterogeneous users and willingness to pay in an ongoing payment for watershed protection initiative in the colombian andes abstract flat fees in payment for environmental services pes schemes promote administrative ease and are perceived as egalitarian however when environmental service es buyers are heterogeneous in their income and water consumption levels this scheme may not be optimal as total payments might become too low and services under supplied this paper estimates willingness to pay wtp higher fees from hydrological service buyers in an ongoing pes initiative in an andean watershed in colombia where small flat user payments have been introduced es users fall into two highly heterogeneous categories smallholder peasants and recreational house owners we perform a contingent valuation analysis in a representative sample of 218 households for improved water services es buyers on average are willing to pay monthly about us 1 premium over current flat pes rate users heterogeneity however affects significantly this outcome while recreational house owners are willing to pay monthly on average us 1 61 more than the current fee smallholders only us 0 41 spatial variables such as distance to the water distribution point and to the town center importantly influence wtp results may help designing user driven pes schemes in line with efficiency and equity objectives

expectation calculation and macroeconomic dynamics the authors establish a framework wherein agents make expectation revision decisions subject to a specified calculation technology and preferences over forecast errors the technology endows agents with correctly specified economic models but the cost of expectation calculation using these models leads to gradual and incomplete adjustment to long run rational expectation equilibrium the rational expectations hypothesis emerges as a special case of the equilibrium paths obtained in the authors framework in a natural rate model of monetary policy calculation technology gives rise to long run nonneutrality and hysteresis effects and incomplete adjustment of forecast rules causes output fluctuations to be amplified copyright 1992 by american economic association

optimal pricing strategies for a cluster of goods own and cross price effects with correlated tastes contingent valuation methods are used to identify observed and unobserved preferences of goods and services we apply these methods in the context of multivariate probit analysis to compute willi

estimating the private benefits of vaccination against cholera in beira mozambique a travel cost approach abstract this paper reports the results of the first study that estimates households private demand for cholera vaccines using the travel cost method we take advantage of an unusual natural experiment in january 2004 more than 41 000 residents from various locations in beira mozambique received two doses of oral cholera vaccine free of charge during the first vaccination trial to test its effectiveness in an endemic cholera zone of africa about 30 000 people participated from outside the target zone resulting in long queues and an average waiting time of about 85 min per dose we estimated travel cost models of the revealed demand for cholera vaccines among households informed of the trial using information collected in in person interviews conducted during the summer of 2005 to explore households participation in the trial we used standard and zero inflated household count models for all household members and dichotomous choice models for the head of the household our analysis shows that the quantity of vaccines obtained by households and the likelihood of participation decreased as travel cost in time and transport expenses rose our best estimates of per capita willingness to pay for the two required doses of cholera vaccine are about 0 85 usd these estimates are sensitive to the assumed value of time spent acquiring vaccines

willingness to pay for gains and losses in visibility and health two different willingness to pay responses are compared willingness to pay to avoid loss of air quality and willingness to pay to obtain gains in air quality contingent valuation data were used to estimate bid functions for these two types of responses for visibility and health comparison of the estimated models indicates that in addition to magnitude differences gains and losses for visibility and health are affected differently by health status risk perceptions and other risk related variables results for the loss measure are more reliable in terms of variability of response and econometric modeling

what s to know about hypothetical bias in stated preference valuation studies abstract hypothetical bias arises in stated preference valuation studies when respondents report a willingness to pay wtp that exceeds what they actually pay using their own money in laboratory or field experiments although this bias is not found in all stated preference surveys hypothetical wtp typically exceeds the actual value by a factor of two to three unfortunately there is no widely accepted general theory of respondent behaviour that explains hypothetical bias therefore two meta analyses are reviewed to test current hypotheses regarding the causes of this overstatement of wtp and the associated recommendations to mitigate the bias suggestions for future research are made including the development of a general theory

deriving benefit measures with higher precision a study of economic values of air quality a calibration strategy using ridge regression to generate more precise estimates for a particular parameter in a model is proposed formulae to compute the proposed ridge estimates from standard ordinary least squares ols results are provided the strategy is applied to recomputing marginal effects of air pollution on property values for 30 housing studies results show that ridge estimates are superior to the ols estimates under the mean squared error criterion the same strategy can be used to reestimate key parameters of interest in other applications such as price elasticities for demand forecasts or the value of a statistical life from hedonic wage regressions

spring cleaning rural water impacts valuation and property rights institutions the brief summarizes the spring cleaning rural water impacts valuation and property rights institutions the first two rounds of spring protection occurred in january april 2005 and august november 2005 the author measure health impacts of spring protection an investment that improves source water quality the author also estimate households valuation of spring protection and simulate the welfare impacts of alternatives to the current system of common property rights in water which limits incentives for private investment spring infrastructure investments reduce fecal contamination by 66 percent but household water quality improves less due to recontamination child diarrhea falls by one quarter travel cost based revealed preference estimates of households valuations are much smaller than both stated preference valuations and health planners valuations and are consistent with models in which the demand for health is highly income elastic the author estimate that private property norms would generate little additional investment while imposing large static costs due to above marginal cost pricing private property will function better at higher income levels or underwater scarcity and alternative institutions could yield pareto improvements

consumer s willingness to pay more for municipal supplied water a case study abstract water supply in rural and urban settlements is an issue of prime concern especially in developing countries large financial inputs are being devoted to new projects and improvement of supply conditions in turn authorities have to look for sources of generating revenue to meet the expenditure and the one major source is the consumer this gives rise to an issue of consumers willingness to pay wtp for water supply service the present study aims at determining consumers wtp more for improvements and identifying the factors affecting wtp it was hypothesized that the satisfaction of consumers about water supply service their beliefs in the water management system and affordability might influence wtp more for water accordingly a sample study was planned in one of the mega cities in india the paper presents an approach to quantify the satisfaction level of consumers relating to water supply service and describes the impact of various factors on wtp through logistic regression analysis also the analysis of percentage increase in wtp is presented in the latter part of the paper

when is inequality fair an experiment on the effect of procedural justice and agency abstract we investigate how the perceived fairness of an income distribution depends on the beliefs about the process that generates the inequality specifically we examine how two crucial features of this process affect fairness views 1 procedural justice equal treatment of all 2 agency one s ability to determine his her income we do this in a lab experiment by differentially varying subjects ability to influence their earnings comparison of ex post redistribution decisions of total earnings under different conditions indicate both agency and procedural justice to matter for fairness highlighting the importance of agency we observe lower redistribution of unequal earnings resulting from risk when risk is chosen freely highlighting the importance of procedural justice we find introduction of inequality of opportunity to significantly increase redistribution despite this increase under inequality of opportunity the share of subjects redistributing none remain close to the share of subjects redistributing fully revealing an underlying heterogeneity in the population about how fairness views should account for inequality of opportunity

discursive ethics in ecosystems valuation and environmental policy abstract discursive ethics has its origin in the frankfurt school of critical theory as an applied ethic it is also associated with practical philosophy in this paper discursive ethics is discussed as a conceptual and practical framework for ecosystems valuation and environmental policy the discussion focuses on three main strengths of discursive ethics 1 it offers an integrated process for ecosystems valuation 2 it offers a decision making framework for responding to uncertainty and risk and the reality of action in indeterminacy 3 it offers a process for deconstructing common valuation concepts and identifying conditions for their critical reconstruction the theoretical discussion is followed by a case study example which illustrates the usefulness of discursive ethics in identifying valuation biases hidden behind disciplinary assumptions and conceptual norms these include cultural norms of rationality information biases which consider hard facts over soft values and disciplinary valuation biases which distinguish between hard and soft expert contributions as the case study illustrates a successful application of discursive ethics in ecosystems valuation and environmental policy demands sensitivity to such underlying biases beyond its policy relevance discursive ethics may also offer a framework for an extended peer discourse through which new foci in research and education can be identified

planning and housing supply in two speed britain modelling local market outcomes summary economic research on uk housing markets has only recently got to grips with measuring and modelling the impact of planning and other public interventions although their importance has long been recognised in theory the interurban panel dataset utilised in this study does represent a step forward by permitting more robust econometric estimation and by incorporating a wider more balanced range of determinant factors a coherent set of relationships governing the key market outcomes house prices new building migration and vacancies can be established the modelling framework is used to explore differences in behavioural responses between markets in high and low demand states simulations are used to track the impact on market outcomes of different policy strategies applied in different types of locality supply measures needed to achieve national targets for house price growth reduction are assessed measures acting on both demand side and supply side variables in areas of high and low demand are compared these suggest that output is more sensitive than price to policies and that quite strong concerted policies would be needed to impact significantly on the major market imbalances currently seen

can empirical demand models assist in con comparative reviews a case study in florida certificate of need con programs for new hospital construction are intended to foster the best selection among competing hospital applications given demands for hospital care in the community yet the merits of con depend in part on the quality of the comparative review process this article examines a case study in florida to illustrate the utility of empirical evaluations using patient choice models i estimate such models to show how patients would respond to a change in hospital choices by simulating the welfare effects of the proposed hospitals i can further predict how prices of hospital care differ by applicant results suggest that empirical analysis using data on patient choice of hospitals may better inform the review process at the same time however it may not give a unique ranking without additional analysis of the fixed costs of proposed services in the context of existing marketwide capacity

the contingent valuation debate why economists should care t he contingent valuation method involves the use of sample surveys questionnaires to elicit the willingness of respondents to pay for generally hypothetical projects or programs the name of the method refers to the fact that the values revealed by respondents are contingent upon the constructed or simulated market presented in the survey a spirited and occasionally mean spirited battle over such methods is currently being waged involving competing factions within the federal government economists and lawyers representing business and environmental groups and interested academics as well at issue is a seemingly quite specific question should environmental regulations currently under development at both the department of the interior and the department of commerce sanction the use of the contingent valuation method in estimating the damage done by spills of oil chemicals or other substances covered by federal law more generally the debate raises broad questions about what economists have to say about the values that individuals place on public or private goods the two papers that follow this one make cases for and against the use of the contingent valuation method my aim here is to provide an overview of the technique and the debate surrounding it i also want to suggest why this debate should matter to economists both professionally and in their roles as citizens and consumers

optimal policy business cycles the effectiveness of economic policies depends on the nature of expectations under adaptive expectations the philipps curve allows a governement to surprise agents under rational expectations there is less room for economic policies we assume that only an endogenously determined proportion of agents form rational expectations and show that this leads the government to optimal policies which result in a policy cycle with real effects c 1998 elsevier science b v all rights reserved

a near rational model of the business cycle with wage and price inertia this paper presents a model in which insignificantly suboptimal behavior causes aggregate demand shocks to have significant real effects the individual loss to agents with inertial price wage behavior is second order in terms of the parameter describing the shock while the effect on real economic variables is first order thus significant changes in business activity can be generated by anticipated money supply changes provided that some agents are willing to engage in nonmaximizing behavior which results in small losses

willingness to pay for ozone control inferences from the demand for medical care abstract the paper applies a discrete choice version of the household production approach to the valuation of nonmarket goods willingness to pay for tropospheric ozone control is estimated using medical care demand under assumptions of input necessity and weak complementarity in example calculations individuals living in high ozone areas are willing to pay over 170 annually for an environment in which ozone concentrations never exceed 12 pphm willingness to pay figures are two to four times larger than medical expense savings caused by the same ozone reductions estimates obtained are compared with results of previous studies and proposed ozone control measures are discussed

on the preservation of deterministic cycles when some agents perceive them to be random fluctuations some recent equilibrium models give rise to complex but deterministic fluctuations we modify the hypothesis of universal perfect foresight by injecting into the economy a nonnegligible fraction of less informed agents who optimize their expected utility with respect to the statistical distribution of prices in the deterministic dynamics for the standard overlapping generations model with money the samuelson case it is proved that if the fraction of consumers with limited knowledge is sufficiently high then all equilibrium cycles of period k 2 disappear the global properties of the case of 2 cycles are studied in detail a brief analysis of the classical case is also given

competitive equilibrium cycles recently there has been a surge of interest in endogenous business cycles that arise in competitive laissez faire economies in the context of standard overlapping generations economies conditions for the existence of equilibrium cycles have been given by grandmont 1983 and by benhabib and day 1982 models of the economy with extrinsic uncertainty or sunspots that have been developed by shell 1977 and by cass and shell 1983 see also balasko 1983 can also lead to equilibrium cycles

using contingent valuation to value environmental improvements alternative methods available to economists for valuing non market goods are outlined contingent valuation is then used to value a ban on straw burning

valuing public goods a comparison of survey and hedonic approaches although the theory of public goods has progressed rapidly since paul samuelson s seminal article the empirical measurement of the value of demand for public goods only recently has received increased attention perhaps the best known and most widely accepted empirical approach has been the use of hedonic prices wherein for example it is assumed that either wages or housing values reflect spatial variation in public good characteristics of different communities this indirect approach based on theoretical work of charles tiebout kelvin lancaster sherwin rosen and others has proven quite successful among public goods or bads which have been valued using the hedonic approach are climate i hoch air pollution robert anderson and thomas crocker d harrison and d rubinfeld social infrastructure r cummings et al and other community characteristics such as noise level j nelson and ethnic composition ann schnare an alternative approach is to directly ask households or individuals to state their willingness to pay for public goods using survey techniques despite arguments that strategic bias will invalidate survey results there exists the need for an alternative to the hedonic approach as an example consider the case of a remote and unique scenic vista valuable to recreators which is threatened by air pollution from a proposed coal fired plant a typical situation in the western united states although it is possible in principle to impute the value of clean air and visibility from the relative decline in local visitation which might follow construction of a power plant information on the value of visibility at the site is needed prior to construction for socially optimal decision making on plant location and pollution control equipment the hedonic approach is unavailable both because the scarcity of local population as opposed to recreators makes use of wage or property value data impossible and because scenic vistas may themselves be unique for these reasons a randall et al first applied survey methods for valuing visibility and other environmental effects of large coal fired power plants in the four corners region of new mexico since this initial application the survey approach has been widely used to value environmental commodities where market data for hedonic analysis is difficult to acquire see for example brookshire ives and schulze rowe et al brookshire et al other early attempts to value public goods using the survey approach include r davis peter bohm and j hammack and g brown although results of using the survey approach for estimating the value of public goods appear to be internally consistent replicable and consistent with demand theory see schulze et al little work on external validation has been reported thus the purpose of this paper is to report on an experiment designed to validate the survey approach by direct comparison to a hedonic property value study the los angeles metropolitan area was chosen for the experiment because of the well defined air pollution problem and be assistant professor university of wyoming assistant professor university of missouri rolla associate professor university of wyoming and professor university of wyoming respectively the research reported here was funded under a grant methods development for assessing air pollution control benefits from the u s environmental protection agency we would like to give special thanks to alan carlin and shelby gerking for their helpful suggestions and contributions additional helpful comments were received from a myrick freeman iii john tschirhart and james murdoch all conclusions are of course our sole responsibility

can contingent valuation measure nonuse values the authors outline how potentially coherent consistent economic values can be determined by use of contingent valuation measurement cvm they use as an example three different cv studies to estimate nonuse values for groundwater the authors also point out that rapidly changing political preferences can complicate the issues they feel that the appropriate goal for cvm is to attempt to provide crystallized values for public decisionmaking

overcoming incentive constraints by linking decisions consider a bayesian collective decision problem in which the preferences of agents are private information we provide a general demonstration that the utility costs associated with incentive constraints become negligible when the decision problem is linked with a large number of independent copies of itself this is established by defining a mechanism in which agents must budget their representations of preferences so that the frequency of preferences across problems mirrors the underlying distribution of preferences and then arguing that agents incentives are to satisfy their budget by being as truthful as possible we also show that all equilibria of the linking mechanisms converge to the target utility levels the mechanisms do not require transferable utility or interpersonal comparisons of utility and are immune to manipulations by coalitions

limited rationality and strategic complements the implications for macroeconomics this paper considers the implications of heterogeneity in information processing abilities for macroeconomic models that exhibit strategic complements the latter is the same concept that has received much attention in the recent macro literature under the headings keynesian coordination problems and positive trading externalities we consider environments in which agents vary in terms of their ability to form expectations and ask whether it is the sophisticated agents or the naive agents who have a disproportionately large effect on macroeconomic equilibrium we find that if macroeconomic interaction exhibits strategic complementarity then it is the naive agents who have a disproportionate impact

response bias in a conjoint analysis of power outages abstract a methodology is proposed for estimating status quo effects resistance to change and loss aversion willingness to pay is less than willingness to accept from consumer survey data conjoint data on israeli households attitudes to electricity outages reveal that both of these effects are pronounced and that they depend on the interviewees characteristics ordered conditional logit estimation indicates that while the estimates are rank sensitive the suggested methodology continues to be applicable finally the conjoint estimates are compared with those obtained by applying the method of contingent valuation

understanding how income influences willingness to pay for joint programs a more equitable value measure for the less wealthy the preponderance of evidence from many studies is that less wealthy households are subjected to greater exposure per capita and in aggregate to air pollution water pollution and toxic wastes it also is the case that the less wealthy are provided with a disproportionately low amount of other programs to enhance amenities provided by the natural environment such as recreational resources and high quality esthetic opportunities both quality and quantity however to date no study has quantified the scale of this effect on the less wealthy as compared to their more wealthy counterparts when it comes to policy choices made on the basis of benefits analysis this study provides a new equity adjustment method to measure quantitatively the effect of this inequity in the case of public goods

nonpecuniary rewards in the workplace demand estimates using quasi market data lack of explicit markets and associated data have impeded measurement of nonpecuniary rewards in the workplace most of the published literature employs hedonic models that permit estimation of market clearing prices but do not allow for identification of demand schedules in an alternative approach used successfully by environmental economists the author develops quasi market data and uses it to estimate demand for the nonpecuniary rewards associated with leadership in addition to price responsiveness individuals exhibit tastes for the amenities of leadership that differ substantially and in expected directions with their personal and professional characteristics copyright 1991 by mit press

auctions experiments and contingent valuation laboratory experiments are a welcome development that promise to make a significant contribution to the study of economic behavior heiner 1985 plott 1982 smith 1982 1985 while relatively new to economics controlled laboratory studies of human behavior have long constituted the core of experimental psychology where there is a wealth of methodological experience from which experimental economists might profitably draw in particular current attempts to apply laboratory auction methods to valuing nonmarket environmental goods would be improved by more rigorous experimental design and data analysis procedures

choke price bias in choice experiments this paper reports on the results from a split sample choice experiment where the effect of changing the maximum level of the cost attribute is investigated the hypothesis was that changing the maximum price level would either give rise to an income effect or have no effect on consumers preferences this was tested in the framework of a valuation study of different quality characteristics of minced pork the data was analysed using a mixed logit error component model which accounts for correlation in the unobserved part of the utility results suggest that the size of the maximum price level does matter and that changing the maximum price level has a statistically significant effect on both the general preferences structure and the wtp estimates hence researchers should be very careful when defining not only the range of the price attribute but also the maximum level of the price attribute

agenda control and reciprocity in sequential voting decisions we study how reciprocity affects the extent to which a chair can exploit her control over an agenda if a committee votes sequentially on a known series of binary proposals we show in a parsimonious laboratory experiment that committee members form vote trading coalitions favoring early proposals not only when the sequence of proposals is exogenously given but also when a chair controls the sequence of proposals vote trading occurs even though chairs manipulate the agenda in their favor punishment for chairs exploiting agenda control is weak as chairs reciprocate support by others more frequently than nonchairs jel c92 d71 d72

economically rational expectations equilibrium abstract at the economically rational expectations equilibrium introduced in this paper agents choose between costly rational expectations and costless adaptive expectations we show that the sequence of economically rational expectations equilibria converges to the rational expectations equilibrium and that all agents will ultimately choose adaptive expectations

assessing community preferences for development projects are willingness to pay studies robust to mode effects abstract the demand driven approaches to development planning currently promoted by development agencies assume that it is possible to obtain accurate information about community preferences for project outputs whereas dozens of techniques are used to assess community preferences limited research has been conducted on the potential effects of data collection mode on findings in this research four different modes a household intercept and telephone survey and a series of focus group discussions were all employed to assess residents willingness to pay for improved water supply services in odessa ukraine findings from these exercises suggest that data elicitation mode effects such as social desirability and time pressures can bias the results obtained in demand assessment research and lead to substantively different conclusions and policy recommendations

efficient estimation methods for closed ended contingent valuation surveys closed ended contingent valuation surveys can be very useful in the evaluation of nonmarket resources respondents merely state whether they would accept or reject a hypothetical threshold amount either as payment for giving up access to the resource or as a fee for its use the authors develop a maximum likelihood procedure which exploits the variation in the threshold values to allow direct and separate point estimates of regression like slope coefficients and error standard deviations without truncation bias their illustration uses data from a survey of recreational fisherman to examine factors which influence individuals willingness to pay copyright 1987 by mit press

evaluating contingent and actual contributions to a local public good tsetse control in the yale agro pastoral zone burkina faso abstract in this case study of the yale agro pastoral zone in southern burkina faso the sustainability of tsetse control as a local public good was shown to depend upon farmers contributions to establish and maintain the traps and targets that attract and kill tsetse flies contingent valuation cv techniques were used to generate estimates of farmers willingness to pay for tsetse control in money labour or both forms of payment of the 261 households that participated in the cv survey these proportions were 23 37 and 40 respectively indicating differentiation among the population and an overall preference for labour contribution a comparison of predicted versus actual contribution of labour indicated that only 56 of households that said they would contribute actually contributed 3 of households that said they would not contribute actually contributed major factors affecting contingent contributions of labour in discrete choice models were identified as well as those to account for in any successful scheme for actual labour contribution these factors include the age of household head offtake of cattle involvement in secondary activities membership in rural organizations current expenditure on drug therapy and cash on hand the results also indicate that full cost recovery of the investment in targets about us 8000 could not be achieved in the short run with the proposed contribution of us 0 90 1 00 per month per household contingent contributions of money were interpreted as maximum donations to expect of beneficiaries as part of the total cost of providing tsetse control

strategic behaviour some experimental evidence abstract a test to detect the presence of strategic bias in responses to direct willingness to pay questioning is developed and applied in an experimental setting involving three separate groups of individuals the smith auction a demand revealing process is also tested using the same format under direct questioning significant over stating behaviour was observed whilst the bids made in the smith auctions were predominantly under statements whilst the smith auction mean bids appear to be most suited to the task of numerical extrapolation the direct questioning process is cheaper to implement it is concluded that a combination of the two questioning techniques involving the adjustment of direct questioning bids on the basis of information generated by a smith auction carried out using a sub sample of respondents offers the most potential for estimating values in a real world case

pivotality and responsibility attribution in sequential voting this paper analyzes responsibility attributions for outcomes of collective decision making processes in particular we ask if decision makers are blamed for being pivotal if they implement an unpopular outcome in a sequential voting process we conduct an experimental voting game in which decision makers vote about the allocation of money between themselves and recipients without voting rights we measure responsibility attributions for voting decisions by eliciting the monetary punishment that recipients assign to individual decision makers we find that pivotal decision makers are punished significantly more for an unpopular voting outcome than non pivotal decision makers our data also suggest that some voters avoid being pivotal by voting strategically in order to delegate the pivotal vote to subsequent decision makers

behavioral identification in coalitional bargaining an experimental analysis of demand bargaining and alternating offers alternating offer and demand bargaining models of legislative bargaining make very different predictions in terms of both ex ante and ex post distribution of payoffs as well as in the role of the order of play the experiment shows that actual bargaining behavior is not as sensitive to the different bargaining rules as the theoretical point predictions whereas the comparative statics are in line with both models we compare our results to studies that attempt to distinguish between these two approaches using field data finding strong similarities between the laboratory and field data regardless of the underlying bargaining process

global horse trading imf loans for votes in the united nations security council we investigate whether temporary members of the united nations security council receive favorable treatment from the international monetary fund imf using panel data for 197 countries over the period from 1951 to 2004 our results indicate a robust positive relationship between temporary security council membership and participation in imf programs even after accounting for economic political and country specific factors there is also evidence that security council membership reduces the number of conditions included in imf programs imf loans seem to be a mechanism by which the major shareholders of the fund can win favor with voting members of the security council

hedonic prices property values and measuring environmental benefits a survey of the issues this paper provides a review of the theoretical basis and the assumptions required in order to use hedonic price equations derived from property value data to obtain measures of the prices and the inverse demand functions for environmental amenities such as air quality it also includes a review and assessment of existing empirical applications of the technique to problems of air and water quality and urban noise

an economic estimate of the effect of a waterside location on property values since the rise of the railway and the later development of road transport the economic value of inland waterways in the uk as freight carriers has steadily declined the reduction in the economic importance of canals has been somewhat offset by their growing popularity as a recreational resource and by the amenity value which they provide to that part of the population living in close proximity to them focussing on two case study areas this paper uses an hedonic price model to estimate the economic benefits which residents gain from a waterside location these benefits may have important policy implications for those bodies who own undeveloped land bordering waterways

comparing contingent valuation and averting expenditure estimates of the costs of irregular water supply abstract we compare two methods contingent valuation and averting expenditures to measure the demand for improved water reliability in urban jordan traditionally averting expenditures a revealed preference measure have been considered a lower bound for demand relative to contingent valuation a stated preference measure estimates we develop a theoretical model to show that this relationship critically depends on household perceptions in our setting this insight is important because households appear to have relatively low confidence in both the reliability and quality of existing water supplies even though water quality tests suggest that utility water is safe to drink from a microbial perspective averting expenditures which reach 4 of monthly expenditures on average include substantial purchases of non network water sourced from water shops or tankers as well as costs in terms of water collection time storage and in home treatment in contrast the contingent valuation responses while correlated with coping costs reveal low willingness to pay for increases in water reliability from the utility network we attribute this departure from the traditional relationship between averting expenditures and contingent valuation to the lack of household confidence in the quality of utility provided water our study thus adds to previous evidence in the literature which points to the importance of consumer perceptions in determining demand for environmental improvements

valuing changes in health risks a comparison of alternative measures essential to efficient provision of health safety and the environment is correct valuation of risks to human health in a world of scarcity difficult decisions concerning tradeoffs between health and other desirables are unavoidable in this paper we develop a model of health investment under uncertainty which yields a general expression for values of changes in risks to human health the preference based values of morbidity risks and mortality risks are ex ante dollar equivalents of changes in expected utility associated with risk changes the preference based values are related to two alternative measures costs of illness and preventive expenditures which are thought to be lower bounds on the value of risk reductions we demonstrate that these alternative measures are not even special cases of the more general measure and that the size relationships among the three measures are complex also we derive the relationship between the willingness to pay for risk changes and the consumer surpluses associated with health changes which occur with certainty the next section contains a brief review of the approaches to valuing changes in health

unravelling the linkages between the millennium development goals for poverty education access to water and household water use in developing countries evidence from madagascar abstract all members of the united nations have pledged to meet eight millennium development goals mdgs by the year 2015 this study looks at the mdg objectives and linkages between poverty education access to water and household water use based on primary data collected in madagascar we find strong links between these mdgs better educated and higher income households rely significantly more on private water supplies and use significantly more water econometric results show that for poorer households who rely on public sources improving access to public water taps by reducing the distance to such a water source would not alter dramatically water use patterns improved access does free up a significant amount of time that could contribute to poverty reduction the willingness of households to pay for improved access is very price sensitive probably because of the liquidity constraints of these households

evaluating the effect of alternative risk communication devices on willingness to pay results from a dichotomous choice contingent valuation experiment two versions of a contingent valuation questionnaire that differ only in the device used to communicate risks from hazardous waste were sent to california households both risk communication devices provide wtp functions which vary in a statistically significant fashion with the absolute risk reduction however these empirical results also demonstrate that different risk communication devices produce statistically different logit equations and hence estimates of willingness to pay wtp for reductions in exposure to hazardous waste the pros and cons of using each risk communication device in cvm surveys is also discussed

mechanisms for efficient voting with private information about preferences we experimentally study behavior in a simple voting game where players have private information about their preferences with random matching subjects overwhelmingly follow the dominant strategy to exaggerate their preferences which leads to ineciency we analyze an exogenous linking mechanism suggested by jackson and sonnenschein 2007 as well as repeated interaction in dierent settings which could allow endogenous linking mechanisms to evolve we find that applying the exogenous mechanism captures nearly all achievable eciency gains whereas repeated interaction leads to significant gains in truthful representation and eciency only in

improved source improved quality demand for drinking water quality in rural india abstract this paper tests the hypothesis that the expansion of improved drinking water supplies in rural india reduced household expenditure on water quality offsetting some of the quality benefits from source protection i estimate demand for in home treatment using geological characteristics to predict a household s drinking water source the probability of treatment and in particular boiling reduces by 18 27 percentage points in response to source protection offsetting 4 of the water quality gains and saving households 0 5 1 in monthly expenditure behavioral choices partly counteract the water quality gains from source protection