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Improving Willingness-to-Pay Elicitation by Including a Benchmark Good

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  • Rebecca Dizon-Ross
  • Seema Jayachandran

Abstract

We propose and validate a simple way to augment the standard Becker-DeGroot-Marschak method that researchers use to elicit willingness to pay (WTP) for a good. The augmentation is to measure WTP for another good ("benchmark good"), one unrelated to both the good the researcher is interested in and the independent variables of interest, and to use WTP for the benchmark good as a control variable in analyses. We illustrate the method and how it can eliminate noise in measured WTP using data collected in Uganda.

Suggested Citation

  • Rebecca Dizon-Ross & Seema Jayachandran, 2022. "Improving Willingness-to-Pay Elicitation by Including a Benchmark Good," AEA Papers and Proceedings, American Economic Association, vol. 112, pages 551-555, May.
    • Handle: RePEc:aea:apandp:v:112:y:2022:p:551-55
    DOI: 10.1257/pandp.20221053
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    Cited by:

    1. Maximilian Spath, 2023. "The qualitative accuracy of the Becker-DeGroot-Marshak method," Papers 2302.04055, arXiv.org.
    2. Angelucci, Manuela & Bennett, Daniel M, 2022. "Depression, Pharmacotherapy, and the Demand for a Novel Health Product," IZA Discussion Papers 15832, Institute of Labor Economics (IZA).

    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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