Disparate WTA–WTP disparities: the influence of human versus natural causes

✍ Scribed by Michael E. Walker; Osvaldo F. Morera; Joanne Vining; Brian Orland

• Publisher: John Wiley and Sons
• Year: 1999
• Tongue: English
• Weight: 161 KB
• Volume: 12
• Category: Article
• ISSN: 0894-3257
• DOI: 10.1002/(sici)1099-0771(199909)12:3<219::aid-bdm329>3.0.co;2-y

✦ Synopsis

A host of studies have shown that respondents typically provide larger values re¯ecting 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 in¯uence 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 in¯uenced disparities between WTA and WTP values. In the ®rst 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.