Grantee Research Project Results
1997 Progress Report: Improving Willingness-to-Accept Responses Using Alternate Forms of Compensation
EPA Grant Number: R824687Title: Improving Willingness-to-Accept Responses Using Alternate Forms of Compensation
Investigators: Mansfield, Carol , Huber, Joel , Van Houtven, George L.
Institution: Desert Research Institute , Duke University
EPA Project Officer: Chung, Serena
Project Period: October 1, 1995 through April 1, 1997
Project Period Covered by this Report: October 1, 1996 through April 1, 1997
Project Amount: $51,402
RFA: Valuation and Environmental Policy (1995) RFA Text | Recipients Lists
Research Category: Environmental Justice
Objective:
Attempts to measure the amount of compensation individuals will demand (their willingness to accept, WTA) for reductions in a public good, such as environmental quality, frequently produce unreliable data. We argue that perceptions of cash as a bribe, difficulties in mentally trading cash for public goods, and other psychological reactions to cash may be responsible for the difficulty in eliciting WTA.We test the hypothesis that individuals will be more receptive to public goods as compensation, such as parks or schools. Each question in our survey offers respondents three options: receipt of cash as compensation for allowing a decline in environmental quality, receipt of a public good as compensation, or a choice between cash and the public good. Comparing the response rates to the three options will provide evidence about people's preferences over types of compensation.
Progress Summary:
Preliminary results, presented in Table 1 on the following page, suggest that even when the cash was worth more to the individuals than the public good in a simple choice framework, they were more likely to accept compensation in the form of a public good when faced with a "public bad" such as a landfill or noise from the local airport that would impact on their entire community. In the first row of Table 1 (column 5), a majority of the respondents choose cash savings over the public good when given the choice of houses, indicating that in a neutral market setting the cash was worth more than the public good to a majority of the respondents. However, more respondents were willing to accept the public good as compensation for the public bad than cash (columns 2 and 3). In the other two questions concerning airport noise and a livestock farm, the number of respondents who accepted cash compensation as a fraction of the total number who accepted compensation in either compensation question (column 4) is lower than the percentage of people who choose cash in the choice question (column 5). Again this suggests that when people are asked whether they would accept compensation to allow a decline in environmental quality, they prefer public goods to cash.Our results have implications for a number of policy issues, including the siting of noxious facilities such as landfills or solid waste incinerators. The siting process is often contentious and difficult. Surveys such as the one we are developing could improve the process by identifying the preferred type of compensation for host communities.
Future Activities:
The next step in our project is to refine the survey before implementing the final version. If our results continue to suggest that individuals prefer public goods as compensation, then additional research will be needed to determine more specifically why this is so and whether people prefer certain types of public goods. Finally, we hope to work with policy makers to produce a survey that could be used to aid actual siting decisions.
(1) Source of problem |
(2) Percentage of respondents who accept cash as compensation |
(3) Percentage of repondencts who accept public good as compensation |
(4) Number of respondents who accept cash as compensation as percentage of total respondents who accepted either cash or the public good (2)/[(2) + (3)] |
(5) Percentage of respondents who choose house with lower taxes* |
Landfill | 13% | 18% | 42% | 61% |
Noise from Airport | 15% | 23% | 39% | 48 |
Livestock Farm | 21% | 29% | 42% | 47% |
*The question offered individuals the choice between two houses ? one with lower property taxes and one located near a public good, such as a park. This choice provides us with information as to whether the public good is worth more or less to the individual than the cash savings.
Journal Articles:
No journal articles submitted with this report: View all 1 publications for this projectSupplemental Keywords:
valuation, contingent valuation, public opinion, survey, willingness to accept, economics, public policy, compensation framework, risk tradeoffs., RFA, Economic, Social, & Behavioral Science Research Program, Scientific Discipline, Economics, decision-making, Ecology and Ecosystems, Economics & Decision Making, Social Science, alternative compensation, compensation, contingent valuation, ecosystem valuation, policy analysis, social psychology, surveys, risk reduction, social impact analysis, valuation, decision analysis, environmental assets, incentives, property values, valuing environmental quality, economic incentives, environmental values, preference formation, willingness to accept, environmental policy, community-based, models, psychological attitudes, public values, social resistance, noxious facilities, public policy, stated preferenceProgress and Final Reports:
Original AbstractThe perspectives, information and conclusions conveyed in research project abstracts, progress reports, final reports, journal abstracts and journal publications convey the viewpoints of the principal investigator and may not represent the views and policies of ORD and EPA. Conclusions drawn by the principal investigators have not been reviewed by the Agency.