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The value of environmental status signaling

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  • Delgado, Michael S.
  • Harriger, Jessica L.
  • Khanna, Neha

Abstract

How much are consumers willing to pay to signal their environmental consciousness? We identify the signaling value of an environmental public good by focusing on hybrid cars and exploiting the physical uniqueness of the Toyota Prius relative to hybrids that look identical to their non-hybrid counterparts. We deploy a quasi-experimental hedonic model to estimate this willingness to pay. We find that, controlling for observable and unobservable factors, the Prius commands an environmental signaling value of $587 or 4.5% of its value. Our research provides lessons for economists and policymakers, and contributes to the literature on identifying signaling values.

Suggested Citation

  • Delgado, Michael S. & Harriger, Jessica L. & Khanna, Neha, 2015. "The value of environmental status signaling," Ecological Economics, Elsevier, vol. 111(C), pages 1-11.
    • Handle: RePEc:eee:ecolec:v:111:y:2015:i:c:p:1-11
    DOI: 10.1016/j.ecolecon.2014.12.021
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    JEL classification:

    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • H40 - Public Economics - - Publicly Provided Goods - - - General

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