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Revisiting the Gap between the Willingness to Pay and Willingness to Accept for Public Goods

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  • Christian A. Vossler
  • Stéphane Bergeron
  • Maurice Doyon
  • Daniel Rondeau

Abstract

Large differences between willingness to pay (WTP) and willingness to accept (WTA) compensation measures have raised concerns over the validity of stated preference methods for valuing public goods. These differences have also motivated the use of WTP scenarios, even where property rights imply a WTA framing. We argue that WTA-WTP gaps can be reduced by deploying incentive-compatible surveys and controlling for game form misconceptions, including a failure of respondents to view the survey as consequential. In a study of large-scale wetland conservation, and using a scenario-specific consequentiality measure, we find that the WTA/WTP ratio is between 4.8 and 6.5 for respondents unlikely to have perceived the survey to be consequential. The ratio falls below 2 for respondents likely to hold consequentiality beliefs. Using incentive-compatible mechanisms and controlling for game form misconceptions could be the path to ensuring valid welfare estimates.

Suggested Citation

  • Christian A. Vossler & Stéphane Bergeron & Maurice Doyon & Daniel Rondeau, 2023. "Revisiting the Gap between the Willingness to Pay and Willingness to Accept for Public Goods," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 10(2), pages 413-445.
    • Handle: RePEc:ucp:jaerec:doi:10.1086/721995
    DOI: 10.1086/721995
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    1. Manuel Frondel & Stephan Sommer & Lukas Tomberg, 2021. "WTA-WTP Disparity: The Role of Perceived Realism of the Valuation Setting," Land Economics, University of Wisconsin Press, vol. 97(1), pages 196-206.

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    More about this item

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D6 - Microeconomics - - Welfare Economics
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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