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Compensating for Public Harms: Why Public Goods Are Preferred to Money

  • Carol Mansfield
  • George L. Van Houtven
  • Joel Huber
Registered author(s):

    This paper provides evidence that public goods represent a more acceptable response to public harms than monetary compensation. We demonstrate a preference for public goods over monetary compensation, in part because receipt of public goods may limit the sense of guilt or bribery from accepting compensation for the injury. More surprising, this preference for public goods over money in the presence of a harm remains in a free-market choice where guilt is not an issue. It appears that public goods psychologically mitigate or balance public harms in a way that makes them more valuable in the presence of public harms.

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    File URL: http://le.uwpress.org/cgi/reprint/78/3/368
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    Article provided by University of Wisconsin Press in its journal Land Economics.

    Volume (Year): 78 (2002)
    Issue (Month): 3 ()
    Pages: 368-389

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    Handle: RePEc:uwp:landec:v:78:y:2002:i:3:p:368-389
    Contact details of provider: Web page: http://le.uwpress.org/

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    1. Frey, Bruno S & Oberholzer-Gee, Felix, 1997. "The Cost of Price Incentives: An Empirical Analysis of Motivation Crowding-Out," American Economic Review, American Economic Association, vol. 87(4), pages 746-55, September.
    2. Andreoni, James, 1990. "Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving?," Economic Journal, Royal Economic Society, vol. 100(401), pages 464-77, June.
    3. Kunreuther, Howard & Kleindorfer, Paul & Knez, Peter J. & Yaksick, Rudy, 1987. "A compensation mechanism for siting noxious facilities: Theory and experimental design," Journal of Environmental Economics and Management, Elsevier, vol. 14(4), pages 371-383, December.
    4. George L. Peterson & Thomas C. Brown, 1998. "Economic Valuation by the Method of Paired Comparison, with Emphasis on Evaluation of the Transitivity Axiom," Land Economics, University of Wisconsin Press, vol. 74(2), pages 240-261.
    5. Bruno S. Frey, 1997. "Not Just for the Money," Books, Edward Elgar, number 1183, December.
    6. Krupnick, Alan J & Cropper, Maureen L, 1992. " The Effect of Information on Health Risk Valuations," Journal of Risk and Uncertainty, Springer, vol. 5(1), pages 29-48, February.
    7. Tversky, Amos & Kahneman, Daniel, 1991. "Loss Aversion in Riskless Choice: A Reference-Dependent Model," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 1039-61, November.
    8. Mansfield, Carol & Van Houtven, George & Huber, Joel, 2001. "The Efficiency of Political Mechanisms for Citing Nuisance Facilities: Are Opponents More Likely to Participate Than Supporters?," The Journal of Real Estate Finance and Economics, Springer, vol. 22(2-3), pages 141-61, March-May.
    9. Kip Viscusi, W. & Magat, Wesley A. & Huber, Joel, 1991. "Pricing environmental health risks: survey assessments of risk-risk and risk-dollar trade-offs for chronic bronchitis," Journal of Environmental Economics and Management, Elsevier, vol. 21(1), pages 32-51, July.
    10. Frey, Bruno S & Oberholzer-Gee, Felix & Eichenberger, Reiner, 1996. "The Old Lady Visits Your Backyard: A Tale of Morals and Markets," Journal of Political Economy, University of Chicago Press, vol. 104(6), pages 1297-1313, December.
    11. Kunreuther, Howard & Easterling, Douglas, 1990. "Are Risk-Benefit Tradeoffs Possible in Siting Hazardous Facilities?," American Economic Review, American Economic Association, vol. 80(2), pages 252-56, May.
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