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Eliciting and Utilizing Willingness-to-Pay: Evidence from Field Trials in Northern Ghana

Author

Listed:
  • Berry, James
  • Fischer, Greg
  • Guiteras, Raymond P.

Abstract

Using the Becker-DeGroot-Marschak (BDM) mechanism, we estimate the willingness-to-pay (WTP) for and impact of clean water technology through a field experiment in Ghana. Although WTP is low relative to the cost, demand is relatively inelastic at low prices. In the short-run, treatment effects are positive—the incidence of children’s diarrhea falls by one third—and consistent throughout the WTP distribution. After a year, usage has fallen, particularly for those with relatively low valuations. Strikingly, the long-run average treatment effect is negative for those with valuations below the median. Combining estimated treatment effects with individual willingness-to pay measures implies households’ valuations of health benefits are much smaller than those typically used by policymakers. Finally, we explore differences between BDM and take-it-or-leave-it valuations and make recommendations for effectively implementing BDM in the field.

Suggested Citation

  • Berry, James & Fischer, Greg & Guiteras, Raymond P., "undated". "Eliciting and Utilizing Willingness-to-Pay: Evidence from Field Trials in Northern Ghana," CEnREP Working Papers 273077, North Carolina State University, Department of Agricultural and Resource Economics.
    • Handle: RePEc:ags:cenrep:273077
    DOI: 10.22004/ag.econ.273077
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    JEL classification:

    • C26 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Instrumental Variables (IV) Estimation
    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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