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Fairness Concerns in Environmental Economics - Do They Really Matter and If So How?

  • Johansson-Stenman, Olof


    (Department of Economics, School of Business, Economics and Law, Göteborg University)

  • Konow, James

    (Department of Economics, Loyola Marymount University)

Are fairness concerns of relevance to environmental economics and, if so, are they sufficiently structured to improve analysis in this field? On both of these questions, we answer in the affirmative, arguing that people’s fairness views are based on both general rules and the context, where context refers to the set of variables and persons employed to interpret and apply the principles. The fairness rules analyzed are accountability (i.e., rewards that are proportional to contributions individuals control), efficiency, need and equality. We conclude that stakeholders typically exhibit a “fairness bias”, i.e., they tend, consciously or not, to interpret and apply fairness principles in a self-serving manner, whereas the views of spectators, or impartial third parties, tend to converge significantly more. Further, we argue that fairness considerations are relevant to both descriptive and prescriptive analysis in environmental economics. These fairness concerns are reflected in the behavior of private and public decision-makers and have potentially important policy implications through the overall social objective function.

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Paper provided by University of Gothenburg, Department of Economics in its series Working Papers in Economics with number 398.

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Length: 34 pages
Date of creation: 16 Nov 2009
Date of revision:
Handle: RePEc:hhs:gunwpe:0398
Contact details of provider: Postal: Department of Economics, School of Business, Economics and Law, University of Gothenburg, Box 640, SE 405 30 GÖTEBORG, Sweden
Phone: 031-773 10 00
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  1. Bradley Ruffle & Richard Sosis, 2006. "Cooperation and the in-group-out-group bias: A field test on israeli kibbutz members and city residents," Artefactual Field Experiments 00104, The Field Experiments Website.
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  6. Olof Johansson-Stenman, 2000. "On the Value of Life in Rich and Poor Countries and Distributional Weights Beyond Utilitarianism," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 17(3), pages 299-310, November.
  7. Dale Stahl & Ernan Haruvy, 2009. "Testing theories of behavior for extensive-form two-player two-stage games," Experimental Economics, Springer, vol. 12(2), pages 242-251, June.
  8. Schkade David A. & Payne John W., 1994. "How People Respond to Contingent Valuation Questions: A Verbal Protocol Analysis of Willingness to Pay for an Environmental Regulation," Journal of Environmental Economics and Management, Elsevier, vol. 26(1), pages 88-109, January.
  9. Konow, James, 2001. "Fair and square: the four sides of distributive justice," Journal of Economic Behavior & Organization, Elsevier, vol. 46(2), pages 137-164, October.
  10. Andreas Lange, 2006. "The Impact of Equity-preferences on the Stability of International Environmental Agreements," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 34(2), pages 247-267, 06.
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