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Public-Good Valuation and Intrafamily Allocation

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Author Info
Jon Strand ()
Abstract

I derive values of marginal changes in a public good for two-person households, measured alternatively by household member i’s 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 household’s WTP for a public good, even when they are purely selfish and answer truthfully. Counting all members’ 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 member’s WTP on behalf of the household closer to the true aggregate WTP, but only the latter raises aggregate WTP.

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Publisher Info
Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 1351.

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Date of creation: 2004
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Handle: RePEc:ces:ceswps:_1351

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Related research
Keywords: public goods; willingness to pay; contingent valuation; intrafamily allocation; Nash bargaining;

Find related papers by JEL classification:
D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
D64 - Microeconomics - - Welfare Economics - - - Altruism
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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References listed on IDEAS
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. Carson, Richard T. & Hanemann, W. Michael, 2006. "Contingent Valuation," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 2, chapter 17, pages 821-936 Elsevier. [Downloadable!] (restricted)
  2. Lundberg, Shelly & Pollak, Robert A, 1993. "Separate Spheres Bargaining and the Marriage Market," Journal of Political Economy, University of Chicago Press, vol. 101(6), pages 988-1010, December. [Downloadable!] (restricted)
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  3. Richard Carson & Nicholas Flores & Norman Meade, 2001. "Contingent Valuation: Controversies and Evidence," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 19(2), pages 173-210, June. [Downloadable!] (restricted)
    Other versions:
  4. Ted Bergstrom, 1995. "A Survey of Theories of the Family," Papers _027, University of Michigan, Department of Economics. [Downloadable!]
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  5. Siwan Anderson & Jean-Marie Baland, 2002. "The Economics Of Roscas And Intrahousehold Resource Allocation," The Quarterly Journal of Economics, MIT Press, vol. 117(3), pages 963-995, August. [Downloadable!] (restricted)
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  6. Zhiqi Chen & Frances Woolley, 1999. "A Cournot-Nash Model of Family Decision Making," Carleton Economic Papers 99-13, Carleton University, Department of Economics. [Downloadable!]
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  7. Quiggin, John, 1992. "Risk, self-protection and ex ante economic value--some positive results," Journal of Environmental Economics and Management, Elsevier, vol. 23(1), pages 40-53, July. [Downloadable!] (restricted)
  8. Johansson, Per-Olov, 1994. "Altruism and the value of statistical life: Empirical implications," Journal of Health Economics, Elsevier, vol. 13(1), pages 111-118, March. [Downloadable!] (restricted)
  9. Martin Browning & P.A. Chiappori, 1996. "Efficient Intra-Household Allocations - A General Characterization and Empirical Tests," Discussion Papers 96-10, University of Copenhagen. Department of Economics.
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  10. Jones-Lee, M W, 1992. "Paternalistic Altruism and the Value of Statistical Life," Economic Journal, Royal Economic Society, vol. 102(410), pages 80-90, January. [Downloadable!] (restricted)
  11. Bartik, Timothy J., 1988. "Evaluating the benefits of non-marginal reductions in pollution using information on defensive expenditures," Journal of Environmental Economics and Management, Elsevier, vol. 15(1), pages 111-127, March. [Downloadable!] (restricted)
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Cited by:
(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. Jon Strand, 2005. "Individual and Household Values of Mortality Reductions with Intrahousehold Bargaining," Journal of Risk and Uncertainty, Springer, vol. 31(2), pages 217-236, September. [Downloadable!] (restricted)
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