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Applied Research in Quality of Life

, Volume 9, Issue 4, pp 819–829 | Cite as

Working Out the Willingness to Accept and Willingness to Pay Gap Using Economics, Psychology, and Happiness Approaches to Valuation

  • Edsel L. BejaJr.Email author
Article

Abstract

The gap between willingness to accept and willingness to pay is an outcome of incomplete valuation procedure. The solution then is a complete valuation procedure. One approach presented in this paper focuses on the income and substitution effects as the missing items to the valuation procedure. Another approach deals with the hedonic contents of the income, the good, and the setting of the good as the missing items to the valuation procedure. This paper submits a third approach that uses (evaluative) happiness as a proxy of utility while taking account of the hallmarks of the other two valuation procedures: the setting of the good under consideration and the income and substitution effects.

Keywords

Willingness to Accept Willingness to Pay WTA-WTP gap Valuation frameworks Economics Psychology Happiness 

JEL Classification

D00 D46 Q51 

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Copyright information

© Springer Science+Business Media Dordrecht and The International Society for Quality-of-Life Studies (ISQOLS) 2013

Authors and Affiliations

  1. 1.Department of EconomicsAteneo de Manila UniversityQuezon CityPhilippines

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