EconPapers    
Economics at your fingertips  
 

What do income tests tell us about the gap between WTA and WTP for public goods?

Edoh Y. Amiran and Daniel A. Hagen

Journal of Environmental Economics and Management, 2018, vol. 90, issue C, 134-146

Abstract: Theory relates the gap between WTA (willingness to accept compensation) and WTP (willingness to pay) to the income elasticity of WTP. It has been suggested that empirical estimates of the income elasticity of WTP can therefore be used to test whether an observed gap between WTA and WTP is consistent with rational behavior. We examine this issue for the case of non-market public goods. We identify the theoretically appropriate tests of income sensitivity, and examine conditions for valid income sensitivity tests. We show that income tests may provide false signals in common settings, indicating an inconsistency where none exists.

Keywords: Willingness to pay; Willingness to accept; Public goods; Income effects (search for similar items in EconPapers)
JEL-codes: Q51 H41 D01 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0095069616300481
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jeeman:v:90:y:2018:i:c:p:134-146

Access Statistics for this article

Journal of Environmental Economics and Management is currently edited by M.A. Cole, A. Lange, D.J. Phaneuf, D. Popp, M.J. Roberts, M.D. Smith, C. Timmins, Q. Weninger and A.J. Yates

More articles in Journal of Environmental Economics and Management from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2018-11-10
Handle: RePEc:eee:jeeman:v:90:y:2018:i:c:p:134-146