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Disparate WTA–WTP disparities: the influence of human versus natural causes
Author(s) -
Walker Michael E.,
Morera Osvaldo F.,
Vining Joanne,
Orland Brian
Publication year - 1999
Publication title -
journal of behavioral decision making
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.136
H-Index - 76
eISSN - 1099-0771
pISSN - 0894-3257
DOI - 10.1002/(sici)1099-0771(199909)12:3<219::aid-bdm329>3.0.co;2-y
Subject(s) - willingness to pay , willingness to accept , product (mathematics) , natural experiment , quality (philosophy) , economics , psychology , statistics , microeconomics , mathematics , philosophy , geometry , epistemology
Abstract A host of studies have shown that respondents typically provide larger values reflecting their willingness to accept compensation (WTA) for the loss of a product than amounts they would be willing to pay (WTP) to acquire the same product (Knetsch and Sniden, 1984; Cummings, Brookshire, and Schulze, 1986; Irwin, 1994). Meanwhile, other evidence indicates that causes for the deterioration or the damage of a product (either human or natural) will influence both WTA and WTP (Kahneman et al ., 1993; Baron and Ritov, 1992). We conducted two experiments to determine whether human‐caused versus naturally occurring events influenced disparities between WTA and WTP values. In the first experiment, residents of a Midwestern city were asked to provide WTA or WTP amounts for the removal of a street tree, either through planned city street widening or because of disease. In the second experiment, students at a large Midwestern university provided WTA and WTP amounts for two environmental scenarios: air quality and the cleanliness of a river. Results of both experiments indicate that the disparity between WTA and WTP is far greater when the damage was caused by humans. Copyright © 1999 John Wiley & Sons, Ltd.