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Differences between Decision and Experienced Utility: An Investigation using the Choice Experiment method

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  • Colombo, Sergio
  • Hanley, Nicholas
  • Tinch, Dugald

Abstract

Recent work by Kahneman and others has led to a new focus in economics on a wellbeing-based approach to utility. This suggests that ‘experienced utility' is an alternative and more appropriate basis for the measurement of economic value compared with ‘decision utility'. In this paper, we apply the choice experiment technique to the valuation of changes in upland landscapes in the UK, in order to identify if experience in the moment or in memory impacts on the value associated with changes in ecosystem services under different management regimes. Four treatments are employed to measure decision utility, experienced utility, and remembered utility at two different time intervals. We show that our experienced utility treatment generates very different estimates of preferences than any of the other treatments. Whilst measurement of experienced utility is rife with difficulties, the approach taken allowed the identification of experiential impacts on utility and may have implications for the future use of experienced utility as a basis for the valuation of public goods.

Suggested Citation

  • Colombo, Sergio & Hanley, Nicholas & Tinch, Dugald, 2010. "Differences between Decision and Experienced Utility: An Investigation using the Choice Experiment method," Stirling Economics Discussion Papers 2010-13, University of Stirling, Division of Economics.
    • Handle: RePEc:stl:stledp:2010-13
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    File URL: http://hdl.handle.net/1893/2706
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    References listed on IDEAS

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    Cited by:

    1. Bartczak, Anna M. & Budziński, Wiktor & Jusypenko, Bartosz & Boros, Piotr W., 2024. "The Impact of Health Status and Experienced Disutility on Air Quality Valuation," Ecological Economics, Elsevier, vol. 217(C).
    2. Li, Xiaoshu & Boyle, Kevin J. & Pullis, Genevieve, 2012. "Does On-site Experience Affect Responses to Stated Preference Questions?," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124991, Agricultural and Applied Economics Association.

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    Keywords

    choice experiments; experienced utility; cost-benefit analysis; public goods; national parks;
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