Differences between Decision and Experienced Utility: An Investigation using the Choice Experiment method
AbstractRecent work by Kahneman and others has led to a new focus in economics on a wellbeing-based approach to utility. This suggests that ‘experienced utility' is an alternative and more appropriate basis for the measurement of economic value compared with ‘decision utility'. In this paper, we apply the choice experiment technique to the valuation of changes in upland landscapes in the UK, in order to identify if experience in the moment or in memory impacts on the value associated with changes in ecosystem services under different management regimes. Four treatments are employed to measure decision utility, experienced utility, and remembered utility at two different time intervals. We show that our experienced utility treatment generates very different estimates of preferences than any of the other treatments. Whilst measurement of experienced utility is rife with difficulties, the approach taken allowed the identification of experiential impacts on utility and may have implications for the future use of experienced utility as a basis for the valuation of public goods.
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Bibliographic InfoPaper provided by University of Stirling, Division of Economics in its series Stirling Economics Discussion Papers with number 2010-13.
Date of creation: Nov 2010
Date of revision:
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Postal: Division of Economics, University of Stirling, Stirling, Scotland FK9 4LA
Phone: +44 (0)1786 467473
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Web page: http://www.econ.stir.ac.uk/
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national parks; public goods; choice experiments; cost-benefit analysis; experienced utility;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-02-19 (All new papers)
- NEP-CIS-2011-02-19 (Confederation of Independent States)
- NEP-DCM-2011-02-19 (Discrete Choice Models)
- NEP-EXP-2011-02-19 (Experimental Economics)
- NEP-UPT-2011-02-19 (Utility Models & Prospect Theory)
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