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On the willingness to pay



On the valuation of non-market goods and services affected by climate change and policies, important theoretical work has been performed. Non-market effects mean that the goods and services do not have a value determined by their trade on the markets.

Therefore, economists rely on specific econometric methods to ascribe them a quantitative monetary value. They measure the agents’ willingness-to-pay and the willingness-to-accept compensation for goods.

By performing a meta-analysis of the data on the topic, it has been found that the disparity is smaller for ordinary private goods than for public and non-market goods.

This means that it is not solely an artefact of using hypothetical transactions or other weak experimental or survey methods. In particular, it is smaller for studies in which students who are used as experimental subjects have to determine the economic value of the goods.

In addition, the disparity is smaller when subjects have experience in valuing the good in real markets or through repeated experimental trials. However, the disparity is significantly smaller in studies using incentive-compatible elicitation mechanisms.


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Tunçel, T., & Hammitt, J. K. (2014). "A new meta-analysis on the WTP/WTA disparity.Journal of Environmental Economics and Management68(1), 175-187.