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Eliciting and utilizing willingness-to-pay: evidence from field trials in northern Ghana

Berry, James, Fischer, Gregory and Guiteras, Raymond (2019) Eliciting and utilizing willingness-to-pay: evidence from field trials in northern Ghana. Journal of Political Economy. ISSN 0022-3808 (In Press)

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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, use 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.

Item Type: Article
Additional Information: © 2019 The University of Chicago
Divisions: Economics
Subjects: H Social Sciences > HC Economic History and Conditions
JEL classification: C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C93 - Field Experiments
D - Microeconomics > D1 - Household Behavior and Family Economics > D12 - Consumer Economics: Empirical Analysis
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L11 - Production, Pricing, and Market Structure; Size Distribution of Firms
L - Industrial Organization > L3 - Nonprofit Organizations and Public Enterprise > L31 - Nonprofit Institutions; NGOs
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O12 - Microeconomic Analyses of Economic Development
Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q5 - Environmental Economics > Q51 - Valuation of Environmental Effects
Date Deposited: 08 Mar 2019 14:30
Last Modified: 16 Sep 2019 23:08
URI: http://eprints.lse.ac.uk/id/eprint/100236

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