Willingness to Pay and Sensitivity to Time Framing: A Theoretical Analysis and an Application on Car Safety

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Abstract

Stated preference (SP) surveys attempt to obtain monetary values for non-market goods that reflect individuals’ “true” preferences. Numerous empirical studies suggest that monetary values from SP studies are sensitive to survey design and so may not reflect respondents’ true preferences. This study examines the effect of time framing on respondents’ willingness to pay (WTP) for car safety. We explore how WTP per unit risk reduction depends on the time period over which respondents pay and face reduced risk in a theoretical model and by using data from a Swedish contingent valuation survey. Our theoretical model predicts the effect to be nontrivial in many scenarios used in empirical applications. In our empirical analysis we examine the sensitivity of WTP to an annual and a monthly scenario. Our theoretical model predicts the effect from the time framing to be negligible, but the empirical estimates from the annual scenario are about 70% higher than estimates from the monthly scenario.

Detaljer

Författare
Enheter & grupper
Forskningsområden

Ämnesklassifikation (UKÄ) – OBLIGATORISK

  • Ekonomi och näringsliv

Nyckelord

Originalspråkengelska
Sidor (från-till)437-456
TidskriftEnvironmental and Resource Economics
Volym56
Utgåva nummer3
StatusPublished - 2013
PublikationskategoriForskning
Peer review utfördJa