Citizen Preferences and BCA
A Model of Willingness-to-Pay behind a Veil of Ignorance
Bibliographic Data
| ID | 13037243 |
|---|---|
| Authors | Morgan Beeson (0000-0002-6322-7347, Newcastle University, corresponding author), Susan Chilton (0000-0003-2547-4467, Newcastle University), Hugh Metcalf (Newcastle University), Jytte Seested Nielsen (0000-0003-0129-0225, Newcastle University) |
| Year | 2024 |
| Volume | 15 |
| Issue | S1 |
| Pages | 183-205 |
| Publication date | 2024-01-01 |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Journal of Benefit-Cost Analysis (JOURNAL) |
| Journal identifiers | ISSN: 2152-2812 • E-ISSN: 2194-5888 |
| Publisher | Cambridge University Press (CUP) (PUBLISHER) |
| DOI | 10.1017/bca.2024.42 |
| OpenAlex | W4406338979 |
| Language | EN |
| References cited | 22 |
Public sector allocative decisions should reflect, as far as possible, the preferences of those affected by the decisions. Conventional benefit–cost analysis (BCA) will simply aggregate individuals’ private willingness-to-pay (WTP) over all affected individuals to estimate the total benefits of a policy that delivers a public good. Given the nature of a public good, it is not unreasonable to consider that an individual may have altruistic preferences over the consumption of the public good by others. In this paper, we set out the theoretical underpinnings for a new citizen-based WTP, informed by political philosophy. Our model extends the standard social utility model (Bergstrom, 2006) of WTP for a public good when individuals are altruists by incorporating a Veil of Ignorance (VoI; Harsanyi, 1955). Our findings show that our WTP (Citizen) correctly includes altruistic as well as distributional preferences of individuals in society into WTP for use in a BCA. When WTP (Citizen) are aggregated for use in a BCA, equal weight is given to each individual’s preference and the BCA will correctly identify potentially Pareto-improving projects in a consistent manner
Business · Economics · Ignorance · Microeconomics · Political science · Willingness to pay · Decision-Making and Behavioral Economics · Economic and Environmental Valuation · Experimental Behavioral Economics Studies · Law · Psychology · Social Psychology
Accounting for the Distribution of Benefits and Costs in Benefit–Cost Analysis
Behavioral Economics and the Conduct of Benefit-Cost Analysis
Cardinal Welfare, Individualistic Ethics, and Interpersonal Comparisons of Utility
The Economics of Safety and Physical Risk
The Valuation of the Social Income
Paternalistic Altruism and the Value of Statistical Life
Welfare Propositions of Economics and Interpersonal Comparisons of Utility
Values, preferences, and the citizen-consumer distinction in cost-benefit analysis
| Highly cited | No |
|---|