Comparing willingness-to-pay and subjective well-being in the context of non-market goods

Dolan, Paul and Metcalf, Robert (2008) Comparing willingness-to-pay and subjective well-being in the context of non-market goods. CEP Discussion Paper, No. 890. Centre for Economic Performance, London School of Economics and Political Science, London, UK. ISBN 9780853282976

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Abstract

In order to value non-market goods, economists estimate individuals’ willingness to pay (WTP) for these goods using revealed or stated preference methods. We compare these conventional approaches with subjective well-being (SWB), which is based on individuals’ ratings of their happiness or life satisfaction rather than on their preferences. In the context of a quasi- experiment in urban regeneration, we find that monetary estimates from SWB data are significantly higher than from revealed and stated preference data. Stigma in revealed preferences, mental accounting in stated preferences and unspecified duration in SWB ratings might explain some of the difference between the valuation methods.

Item Type:	Monograph (Discussion Paper)
Official URL:	http://cep.lse.ac.uk/
Additional Information:	© 2008 The authors
Uncontrolled Keywords:	willingness to pay, preferences, life satisfaction, subjective well-being, nonmarket goods
Library of Congress subject classification:	H Social Sciences > HB Economic Theory
Journal of Economic Literature Classification System:	D - Microeconomics > D6 - Welfare Economics > D61 - Allocative Efficiency; Cost-Benefit Analysis H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H23 - Externalities; Redistributive Effects; Environmental Taxes and Subsidies D - Microeconomics > D6 - Welfare Economics > D62 - Externalities Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q5 - Environmental Economics > Q51 - Valuation of Environmental Effects C - Mathematical and Quantitative Methods > C2 - Econometric Methods: Single Equation Models; Single Variables > C21 - Cross-Sectional Models; Spatial Models; Treatment Effect Models
Sets:	Collections > Economists Online Research centres and groups > Centre for Economic Performance (CEP)
Rights:	http://www.lse.ac.uk/library/rights/LSERO.htm
Identification Number:	No. 890
URL:	http://eprints.lse.ac.uk/28504/

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