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Social desirability and the WTP–WTA disparity in common goods

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Abstract

This study explores the role of social desirability bias in the willingness to pay (WTP)–willingness to accept (WTA) disparity debate. In the context of a valuation scenario involving air quality in Athens, Greece, we examine whether the well-known WTP–WTA disparity is in place and whether social desirability could be related to this gap by introducing different magnitudes of bias on the two welfare measures. To do so, we contrast the results obtained from the contingent valuation method with those from the inferred valuation method that is believed to mitigate social desirability bias. On the policy side, the study shows that estimates of welfare loss associated with the Greek government’s decision to equalize the tax on diesel fuel and heating oil, which had serious side-effects on air quality, vary greatly with respect to the value measure and method of elicitation.

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Notes

  1. The ‘Laffer Curve’ is the inverted U-shaped relation between tax rate and tax revenue and has been discussed in the literature ever since Wanniski’s (1978) paper.

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Authors and Affiliations

  1. Department of Economics, University of Ioannina, Ioannina, Greece

    Achilleas Vassilopoulos

  2. ICRE8: International Centre for Research on the Environment and the Economy, Athens, Greece

    Achilleas Vassilopoulos

  3. Imperial College of London, South Kensington, London, SW7 1NA, UK

    Niki Avgeraki

  4. Department of Agricultural Economics and Rural Development, Agricultural University of Athens, Athens, Greece

    Stathis Klonaris

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  1. Achilleas Vassilopoulos
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  2. Niki Avgeraki
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  3. Stathis Klonaris
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Correspondence to Achilleas Vassilopoulos.

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Vassilopoulos, A., Avgeraki, N. & Klonaris, S. Social desirability and the WTP–WTA disparity in common goods. Environ Dev Sustain 22, 6425–6444 (2020). https://doi.org/10.1007/s10668-019-00490-6

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