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Eliciting and Utilizing Willingness-to-pay: Evidence from Field Trials in Northern Ghana

James Berry (), Greg Fischer and Raymond Guiteras

STICERD - Economic Organisation and Public Policy Discussion Papers Series from Suntory and Toyota International Centres for Economics and Related Disciplines, LSE

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, usage 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.

Keywords: price mechanism; heterogeneous treatment effects; health behaviour; Becker-DeGroot-Marschak; field experiments (search for similar items in EconPapers)
JEL-codes: C26 C93 D12 L11 L31 O12 Q51 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-exp and nep-hea
Date: 2018-05
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Working Paper: Eliciting and Utilizing Willingness to Pay: Evidence from Field Trials in Northern Ghana (2015) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:cep:stieop:066

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