Change In Willingness To Pay Research Articles

The Long‐Term Impact of Positive and Negative Information on Food Demand

We examine whether the effects of information about product labels change over time. The analysis is based on 110 adult (nonstudent) participants who participated in a two‐stage economic experiment taking place three months apart. In the first stage of the experiment, willingness‐to‐pay (WTP) was elicited for items that were stated to contain bovine growth hormones, genetically modified ingredients, ingredients that have been exposed to antibiotics, and ingredients that were irradiated. Depending on the treatment, each first‐stage auction was supplemented with positive or negative information about each of the labels. The second‐stage experiments re‐elicited WTP for the same group of participants and the same items accompanied with the original labels, but this time without any secondary information. Our results suggest that the adverse impact of negative information does not persist over time; whereas in the case of positive information, changes in WTP from the initial to the follow‐up auctions are not statistically significant. This study enhances our understanding of how consumers retain information over a longer time period and suggests that previous studies that measure labeling impacts on WTP using isolated, single‐shot experiments may overstate the longer term effects of labels and negative information.

Fear and Trust: How Risk Perceptions of Avian Influenza Affect the Demand for Chicken

This article quantifies the impact of H7N9 bird flu on chicken demand and consumer willingness to pay (WTP) in China. The surveys were administered to the same group of respondents in April 2012 and 2013. In 2012 we asked generic questions regarding food safety in chilled chicken without any mentioning of bird flu and in 2013 in the midst of the outbreak we resurveyed the group again. Since these respondents were surveyed both times (before and after the bird flu outbreak), the data formed a “natural experiment”. We measure risk perception, fear and trust against actual reduction in consumption and stated change in WTP for safe chicken between 2012 and 2013. Through a survey conducted in each year on the same Chinese urban consumers, we are able to construct a Marshallian-Hicksian elasticity measure signifying the relative welfare loss from a food risk. Furthermore, we found that: (1) like fear, the impact of distrust (especially the distrust in government) was negative for consumption; (2) macro fear of H7N9’s spreading, and distrust in government enhanced the deviation of consumption and WTP; (3) stronger consumer heterogeneity in consumption existed in cities with higher number of incidences; (4) the sheer mentioning of H7N9 is more important and negative than whether it was associated with a risk-perception reducing or risk-perception elevating message given to consumers; and (5) unlike what the conventional theory would predict that upon the rising of a specific risk factor, demand will drop and WTP for safter products will increase, while consumption of chicken never increased after the emergence of H7N9 in 2013, WTP for safer chicken did not increase either relative to generic risks associated with consuming chicken in 2012.

TAXPAYER WILLINGNESS TO PAY FOR HEALTH INSURANCE REFORM: A CONTINGENT VALUATION ANALYSIS

A key criterion for evaluating policies to expand health insurance coverage is weighing the costs of such policies against the willingness of the public to pay for coverage expansions. We use new panel survey data from New York State to estimate residents' willingness to pay (WTP) to expand public insurance coverage. Using a nonparametric double‐bounded contingent valuation (CV) approach, we specifically ask residents about their WTP to reduce the rate of uninsurance in the state. Our results imply an aggregate lower‐bound WTP of over $2,800 per year to cover one person. We also analyze heterogeneity in WTP by sub‐group and changes in individual WTP over time between 2008 and 2010. We find that a large majority of residents are willing to pay additional taxes to reduce the number of uninsured in the state, and that average WTP remained remarkably stable despite the economic downturn and the politically polarized discussions surrounding the Affordable Care Act. Decomposing the changes in individual WTP, we find that economic factors related to the recession, including changes in income and employment status, cannot explain changes in individual WTP, whereas individual changes in political opinions about health insurance reform between 2008 and 2010 are strongly correlated with changes in WTP. (JEL H20, H42, H51, H75, I13)

Contingent Valuation of a Classic Cycling Race

We provide a contingent valuation of a major cycling event, namely the Tour of Flanders. Starting from survey data, we estimate several models with different assumptions about (1) the latent willingness to pay (WTP) distribution and (2) the change in WTP when responding to the follow-up question in a double-bounded dichotomous framework. We relate the individual figures to explanatory factors and find that people residing in the event’s core region as well as spectators have a higher valuation. Incorporating the spatial effect, we arrive at an estimated aggregate value of 24.3 million euro.

International differences in willingness to pay for reduced risks due to risk representation: evidence from cross-country surveys in Northeast Asia

International benefit transfer from developed countries is often used to evaluate international aid projects due to the lack of primary study in the policy country, particularly when the policy country is a developing one. This paper shows that different countries may have considerable differences in their willingness to pay (WTP) for risk reduction using three surveys with the same protocol carried out around the same time in a coastal city in China, Japan, and South Korea. Japanese WTP is more than the South Korean one. Chinese WTP changes greatly depending on price adjustment coefficients: purchasing power price index or real exchange rate, but it is not impacted by risk reduction representation as in Japan and South Korea. This result suggests that more attention needs to be paid to the effect of international cultural settings when applying international benefit transfers.

Using a contingent valuation approach for improved solid waste management facility: Evidence from Kuala Lumpur, Malaysia

This study employed contingent valuation method to estimate the willingness to pay (WTP) of the households to improve the waste collection system in Kuala Lumpur, Malaysia. The objective of this study is to evaluate how household WTP changes when recycling and waste separation at source is made mandatory. The methodology consisted of asking people directly about their WTP for an additional waste collection service charge to cover the costs of a new waste management project. The new waste management project consisted of two versions: version A (recycling and waste separation is mandatory) and version B (recycling and waste separation is not mandatory). The households declined their WTP for version A when they were asked to separate the waste at source although all the facilities would be given to them for waste separation. The result of this study indicates that the households were not conscious about the benefits of recycling and waste separation. Concerted efforts should be taken to raise environmental consciousness of the households through education and more publicity regarding waste separation, reducing and recycling.

Change in willingness to pay for normal delivery and caesarean section during pregnancy and after delivery in Kathmandu

To determine the change in willingness to pay (WTP) measured at pregnancy and at postpartum before and after knowing hospital costs among women who gave birth by normal delivery (NL) and caesarean section (CS) and to identify factors affecting the change in WTP. A prospective study was conducted from May to August 2009 at Tribhuvan University Teaching Hospital, Kathmandu, Nepal. WTP for total costs was measured by double-bound dichotomous contingent valuation and an open-ended technique. The trend of WTP over time was tested using longitudinal analysis. Associated factors to the positive or negative change in WTP were analysed by logistic regression. Of 438 pregnant women followed up both at pregnancy and postpartum, two-thirds were willing to pay for services at the initial bid of the double-bound method by $60-$85 for NL and $110-$170 for CS. There were no significant differences in the median WTP measured during pregnancy between NL and CS. The WTP of both groups changed significantly over time (P < 0.001). Caesarean section, perception of good care, information provided on delivery costs and discussion with family about cost were significantly associated with changes from pregnancy to the postpartum period. In low-income countries such as Nepal, where out-of-pocket health care expenditures are common, women perceived the health benefit of delivery care in hospital, especially for emergency CS. Their WTP had changed substantially after delivery, and awareness of the associated factors is essential for further policy and planning to improve the services and utilization.

Effects of Label Information on Consumer Willingness‐to‐Pay for Food Attributes

AbstractChoice experiments (CEs) are often used to elicit consumer willingness‐to‐pay (WTP) for food attributes. A concern about these approaches is that food attributes provided to respondents are assumed independent of attributes not provided. We use surveys containing a series of CEs to investigate effects of adding beef steak attributes. WTP for important attributes in the CEs decrease when the number of attributes increases from three to four, while WTP increases when the number of attributes increases from four to five. Changes in WTP for attributes depend on their relationships with newly added attributes and the number of attributes presented.

Willingness to Pay and Competition in Online Auctions

The authors model how to measure consumer willingness to pay (WTP) using an English, or ascending first-price, auction based on two general bidding premises: No bidder bids more than his or her WTP, and no bidder allows a rival bidder to win at a price that he or she is willing to beat. In other words, the authors propose a “no-regret” rule in bidding. They impose no other restrictive assumptions on “maximands” or the bidders' behaviors in a competitive auction context. The authors model WTP as having two components: a pure product feature component and one based on the auction market environment. The latter includes bidder experience, seller reputation, and measures for competition among bidders and items. The proposed model is general enough to include a “buy-it-now” (equivalent to a posted price) auction mechanism. The authors use data on notebook auctions from one of the largest Internet auction sites in Korea. They find that most product characteristics matter in the expected ways. There are two additional primary findings: First, WTP declines as more similar items are concurrently listed with the focal item; there is an additional effect if these similar items also belong to the same brand. Therefore, market thickness matters for consumer WTP. Second, more extensive site surfing and bidding histories lead to lower WTP, implying that search costs and experience matter in bidding. As specific substantive benefits, the authors demonstrate how sellers can calculate changes in WTP and, thus, the expected revenue as the number of concurrently available similar items varies.

Tradeoffs between emotional and sensory perceptions of freshness influence the price consumers will pay for apples: Results from an experimental market

Experimental markets were used to elicit the monetary value consumers place on ‘Granny Smith’ apples that had been stored for ∼2 months (‘New apples’) compared with ∼8 months (‘Old apples’). The consumers were informed of the different storage durations, and were given the opportunity to purchase apples using their own money. Midway through the experimental market (which was run like an auction), the consumers were allowed to taste the apples. While the ‘New apples’ had been stored for a shorter duration, they were of poorer texture than the ‘Old apples’—this was confirmed by penetrometer tests, which gave mean values of 68 and 84 N, respectively. ‘New apples’ were preferred over ‘Old apples’ by 90% of consumers, but this dropped to 60% after tasting. The mean price consumers bid to exchange ‘Old’ for ‘New’ apples was $ 0.76 kg −1, and this did not change significantly after tasting. However, opinions on monetary value were polarized after tasting. Some consumers dropped their bids to $ 0, while others placed even higher bids. One participant stated: “I don’t want to feed my children apples that are 8 months old – I want them to have fresh healthy apples!” A ‘thought listing’ procedure elicited participants’ opinions on fruit quality and their reasons for changes in willingness-to-pay (WTP) for apples. The results are discussed in relation to the marked change in WTP that occurred following tasting for participants who assessed monetary value on the basis of sensory attributes compared with those whose value was based on knowledge of storage duration. Overall, this study demonstrates that both sensory and emotional aspects to consumer assessments of freshness influence consumer perceptions of monetary value of apples.

Effect of Postoperative Experiences on Willingness to Pay to Avoid Postoperative Pain, Nausea, and Vomiting

The authors assessed the willingness to pay (WTP) for "perfect" prophylactic antiemetics and analgesics in patients who were scheduled to undergo surgery during general anesthesia. Furthermore, they determined whether postoperative experiences of pain and nausea and vomiting (PONV) changed patients' WTP. Data were collected alongside a randomized clinical trial that investigated the incidence of PONV in patients anesthetized with either inhalation anesthesia or total intravenous anesthesia. A subset of 808 consecutive patients participating in the trial completed WTP questionnaires 1 day before and 2 weeks after surgery. The outcome measure was the maximum amount of money that patients were willing to pay for "perfect" antiemetics and analgesics. Preoperative WTP and individual WTP changes after surgery were analyzed in relation to baseline characteristics and postoperative pain and PONV experiences. Prevention of postoperative pain was valued higher than prevention of PONV. The median preoperative WTP for analgesics was US dollar 35 (interquartile range, dolalr 7-69) vs. US dollar 17 (interquartile range, dollar 7-69) for antiemetics. Individual WTP changes for antiemetics were not related to PONV experience, whereas severe postoperative pain (numerical rating score > or = 8) was associated with an increase in the WTP for analgesics. Severe postoperative pain experiences increased patients' WTP for analgesics, but PONV did not increase WTP for antiemetics. The elicited WTP values were lower than those reported in previous studies, which is possibly related to differences in market culture or patients' attitudes toward postoperative pain, nausea, and vomiting.

Applying socio-ecological economics: A case study of contingent valuation and integrated catchment management

Socio-ecological economics has emerged as a new movement within ecological economics that overtly takes account of the sociological and political bases of economic activity as well as the biophysical base. The paper comments on the usefulness of the principles of socio-ecological economics in the light of a recent example of applied social and economic research into contingent valuation (CV) and integrated catchment management (ICM) in the Hawkesbury-Nepean. In the first Australian study of the temporal stability of CV responses, it was found that average willingness to pay (WTP) to improve water quality did not change significantly over a 2-year period, nor could any statistically significant explanation of bid size or change in WTP be found. On each of the three occasions when CV surveys were completed, participants were asked a series of follow-up questions and then engaged in discussion on attitudes to CV, reasons for any changes in WTP and views of possible uses for CV in ICM. Socio-ecological economics proved to be useful in analysing the results of the case study by identifying a wider range of possible determinants of individual and government behaviour than simple maximisation models. These determinants, especially ethical values for individuals and organisational culture for governments provided good explanations for the qualitative results obtained, and perhaps a better explanation of the quantitative results. It also usefully emphasised the dynamics of the interaction between the different determinants of behaviour with regard to CV. Consideration of the likely dynamic between the different organisational structures and cultures within ICM raised the possibility that introducing CV into ICM in a widespread fashion could lead to resistance and modification of its use to a more qualitative and educative role. The ideas of socio-ecological economics have made a valuable contribution to the understanding and analysis of this case study and provide the beginning of a research agenda for socially-oriented ecological economists. Results of the case study suggest that this agenda should include the applications of learning theory and social ecology to policy-making institutions and processes for moving towards sustainability.