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Property Consciousness And The Difference Between Wtp And Wta


  • Rahul Shastri

    (National Akademi of Development)


It is well known in Environmental Economics that payment offered on the Willingness to Pay (WTP) principle is much smaller than the compensation demanded on the Willingness to Accept (WTA) principle. Payment under WTP goes into the environment and is communally enjoyed, whereas compensation under WTA goes into one’s bank account. Public goods/benefits are valued less than private goods/benefits, due to technical reasons, as well as ‘pure property consciousness’. This explains why WTP is much less than WTA. It is suggested here that the ratio of WTP to WTA can be taken as an index of socialisation of property consciousness. A value of zero would indicate complete individualism, while a value of 1 would indicate an indifference between public and private forms of enjoyment of environmental benefits. It is interesting to note that this ratio is generally less than ½, (95% confidence interval: 0.8 £ q £ 0.38). The measure has a wide range of application. It can be derived from the difference in valuation of any quasi public good that can also be privately supplied and enjoyed. And its measurement may throw light on the failures and successes of co- operative/public/collective property based experiments.

Suggested Citation

  • Rahul Shastri, 2005. "Property Consciousness And The Difference Between Wtp And Wta," Public Economics 0504001, EconWPA.
  • Handle: RePEc:wpa:wuwppe:0504001
    Note: Type of Document - pdf; pages: 4

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    References listed on IDEAS

    1. Sam Peltzman, 1992. "Voters as Fiscal Conservatives," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 327-361.
    2. Tabellini, Guido & Alesina, Alberto, 1990. "Voting on the Budget Deficit," American Economic Review, American Economic Association, vol. 80(1), pages 37-49, March.
    3. Aaron, Henry & McGuire, Martin, 1970. "Public Goods and Income Distribution," Econometrica, Econometric Society, vol. 38(6), pages 907-920, November.
    4. Dodge, David A, 1975. "Impact of Tax, Transfer and Expenditure Policies of Government on the Distribution of Personal Income in Canada," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 21(1), pages 1-52, March.
    5. Ludger Schuknecht & Vito Tanzi, 1995. "The Growth of Government and the Reform of the State in Industrial Countries," IMF Working Papers 95/130, International Monetary Fund.
    6. Piggott, John & Whalley, John, 1987. "Interpreting Net Fiscal Incidence Calculations," The Review of Economics and Statistics, MIT Press, vol. 69(4), pages 685-694, November.
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    More about this item


    Willingness to Pay; Willingness to Accept; Property consciousness; Socialisation;

    JEL classification:

    • A - General Economics and Teaching
    • Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics

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