Public-good valuation and intra-family allocation
AbstractI derive values of marginal changes in a public good for two-person households, measured alternatively by household member iâs willingness to pay (WTP) for the good on behalf of the household, WTPi(H), or by the sum of individual WTP values across family members, WTP(C). Households are assumed to allocate their resources in efficient Nash bargains over private and common household goods. WTPi(H) is then found by trading off the public good against household goods, and WTP(C) by trading the public good off against private goods. I then find that WTPi(H) is higher (lower) when member i has a high (low) marginal valuation of the public good, but on average represents WTP(C) correctly. Individuals then tend to represent households correctly on average when questioned about the householdâs WTP for a public good, even when they are purely selfish and answer truthfully. Counting all membersâ WTP answers on behalf of the household then leads to double counting. Pure and paternalistic altruism (the latter attached to consumption of the public good) move each memberâs WTP on behalf of the household closer to the true aggregate WTP, but only the latter raises aggregate WTP.
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Bibliographic InfoArticle provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.
Volume (Year): 38 (2007)
Issue (Month): 4 (December)
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Web page: http://www.springerlink.com/link.asp?id=100263
Public goods; Willingness to pay; Contingent valuation; Intrafamily allocation; Nash bargaining; H41; D13; Q26; D64;
Other versions of this item:
- Jon Strand, 2004. "Public-Good Valuation and Intrafamily Allocation," CESifo Working Paper Series 1351, CESifo Group Munich.
- Strand, Jon, 2009. "Public-good valuation and intrafamily allocation," HERO On line Working Paper Series 2003:20, Oslo University, Health Economics Research Programme.
- Strand, Jon, 2003. "Public-good valuation and intrafamily allocation," Memorandum 28/2002, Oslo University, Department of Economics.
- D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
- D64 - Microeconomics - - Welfare Economics - - - Altruism; Philanthropy
- H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
- Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources
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