Theory of WTP and Stated Preference
- Read KO pages 44-55
- Watch the following short videos CSF videos to reinforce these concepts:
- Read Koichiro Ito’s Forbes Article on estimating WTP for clean air in China.
- What does it mean to use “revealed preference” to value the environment? Explain your answer referencing one of the methods from the readings/ videos. (one paragraph or less)
- Berck and Helfand Chapter 6 (on Canvas)
Stated Preference and Benefit Transfer
- Watch this CSF video on Contingent Valuation
- Stephen Colbert on VSL
- Read “Euthanizing the Value of a Statistical Life”, by Trudy Cameron (REEP, 2010)
Response questions In your own words, describe what the “value of statistical life” is. From the article, what is one reason that name is less than ideal? (one paragraph)
- 538 on “What should the government do to save a life?”
- Portney (JEP 1994) introduces the Exxon stated preference debate.
- Kling et al (JEP 2012) provide a retrospective look at whether “some number has become better than no number”
- Tol on valuing Stonehenge
- How to place a value on environmental benefits? Concept is same as in micro (WTP). Challenge is that we don't see prices.
- Stated preference methods instead try to recover WTP from highly structured surveys. Know the pros and cons.
- Revealed preference methods try to infer what people would pay from their actions (ie travel cost method, averting expenditure).
- Value of Statistical Life