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The Price Elasticity of Mass Preferences

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  • Green, Donald Philip

Abstract

I compare the price elasticity of economic and political preferences. My central hypothesis is that willingness to pay, whether expressed verbally or through cash transactions, is more price-elastic for economic consumption goods than for public goods. I find that increases in price greatly diminish the proportion of people willing to pay for consumer goods, such as housing or hardback books; whereas the proportion willing to pay more in taxes to support a public good, such as environmental protection or shelter for the homeless, is much less responsive to changes in price. I conclude by discussing the theoretical and political implications of willingness to pay for public and private goods.

Suggested Citation

  • Green, Donald Philip, 1992. "The Price Elasticity of Mass Preferences," American Political Science Review, Cambridge University Press, vol. 86(1), pages 128-148, March.
    • Handle: RePEc:cup:apsrev:v:86:y:1992:i:01:p:128-148_08
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    1. Axsen, Jonn & Kurani, Kenneth S., 2010. "Interpersonal Influence and Pro-Societal Consumption: A Review of Diffusion, Conformity, Dissemination, Translation and Reflexivity," Institute of Transportation Studies, Working Paper Series qt8f49p47g, Institute of Transportation Studies, UC Davis.
    2. Axsen, Jonn, 2010. "Interpersonal Influence within Car Buyers’ Social Networks: Observing Consumer Assessment of Plug-in Hybrid Electric Vehicles (PHEVs) and the Spread of Pro-Societal Values," Institute of Transportation Studies, Working Paper Series qt8p32d18k, Institute of Transportation Studies, UC Davis.
    3. Sovacool, Benjamin K. & Axsen, Jonn, 2018. "Functional, symbolic and societal frames for automobility: Implications for sustainability transitions," Transportation Research Part A: Policy and Practice, Elsevier, vol. 118(C), pages 730-746.
    4. Diederich, Johannes & Goeschl, Timo, 2011. "Giving in a Large Economy: Price vs. Non-Price Effects in a Field Experiment," Working Papers 0514, University of Heidelberg, Department of Economics.
    5. Johannes Diederich & Timo Goeschl, 2014. "Willingness to Pay for Voluntary Climate Action and Its Determinants: Field-Experimental Evidence," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 57(3), pages 405-429, March.
    6. Axsen, Jonn & Kurani, Kenneth S., 2009. "Interpersonal Influence within Car Buyers’ Social Networks: Five Perspectives on Plug-in Hybrid Electric Vehicle Demonstration Participants," Institute of Transportation Studies, Working Paper Series qt35w7s3jp, Institute of Transportation Studies, UC Davis.
    7. Diederich, Johannes & Goeschl, Timo, 2017. "To mitigate or not to mitigate: The price elasticity of pro-environmental behavior," Journal of Environmental Economics and Management, Elsevier, vol. 84(C), pages 209-222.
    8. Johannes Diederich & Timo Goeschl, 2013. "To Give or Not to Give: The Price of Contributing and the Provision of Public Goods," NBER Working Papers 19332, National Bureau of Economic Research, Inc.
    9. Diederich, Johannes & Goeschl, Timo, 2011. "Willingness to Pay for Individual Greenhouse Gas Emissions Reductions: Evidence from a Large Field Experiment," Working Papers 0517, University of Heidelberg, Department of Economics.
    10. Kuok Wei Chong & Nik Mohd Hazrul Nik Hashim, 2016. "Threats to New Product Innovativeness and the Effects of Supplier Influence Processes," International Journal of Marketing Studies, Canadian Center of Science and Education, vol. 8(1), pages 170-180, February.
    11. Louise G. White, 1994. "Policy analysis as discourse," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 13(3), pages 506-525.
    12. Ligas, Mark & Chaudhuri, Arjun, 2012. "The moderating roles of shopper experience and store type on the relationship between perceived merchandise value and willingness to pay a higher price," Journal of Retailing and Consumer Services, Elsevier, vol. 19(2), pages 249-258.
    13. Healy, Andrew & Malhotra, Neil, 2009. "Myopic Voters and Natural Disaster Policy," American Political Science Review, Cambridge University Press, vol. 103(3), pages 387-406, August.
    14. Kurani, Kenneth S & Axsen, Jonn & Caperello, Nicolette & Davies, Jamie & Stillwater, Tai, 2009. "Learning from Consumers: Plug-In Hybrid Electric Vehicle (PHEV) Demonstration and Consumer Education, Outreach, and Market Research Program," Institute of Transportation Studies, Working Paper Series qt9361r9h7, Institute of Transportation Studies, UC Davis.
    15. Dietz, Thomas & Stern, Paul C., 1995. "Toward a theory of choice: Socially embedded preference construction," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 24(2), pages 261-279.

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