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Comparing Willingness-to-Pay and Subjective Well-Being in the Context of Non-Market Goods

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Author Info
Paul Dolan
Robert Metcalfe

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Abstract

In order to value non-market goods, economists estimate individuals' willingness to pay(WTP) for these goods using revealed or stated preference methods. We compare theseconventional approaches with subjective well-being (SWB), which is based on individuals'ratings of their happiness or life satisfaction rather than on their preferences. In the context ofa quasi- experiment in urban regeneration, we find that monetary estimates from SWB dataare significantly higher than from revealed and stated preference data. Stigma in revealedpreferences, mental accounting in stated preferences and unspecified duration in SWB ratingsmight explain some of the difference between the valuation methods.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0890.

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Date of creation: Oct 2008
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Related research
Keywords: willingness to pay; preferences; life satisfaction; subjective well-being; nonmarketgoods;

Find related papers by JEL classification:
D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
D62 - Microeconomics - - Welfare Economics - - - Externalities
H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Angus Deaton & Jane Fortson & Robert Tortora, 2009. "Life (evaluation), HIV/AIDS, and Death in Africa," NBER Working Papers 14637, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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