Skip to main content
Log in

Liquidity Constraints and Willingness to Pay for Solar Lamps and Water Filters in Jakarta

  • Original Article
  • Published:
The European Journal of Development Research Aims and scope Submit manuscript

Abstract

In this study, using the Becker–DeGroot–Marschak mechanism, we assess the Willingness to Pay for water filters and solar lamps in Indonesia. The study shows that credit constraints are important determinants of the low levels of WTP and low adoption rates of preventative health technologies. Providing women with an option to spread out the payments for these products over 50 weekly periods more than doubles the maximum WTP.

Cette étude utilise le mécanisme BeckerdeGrootMarschak et évalue la volonté de payer (VDP) pour les filtres à eau et les lampes solaires en Indonésie. L’étude montre que les contraintes de crédit sont des déterminants importants des faibles niveaux de VDP et des faibles taux d’adoption des technologies de prévention liées à la santé. Offrir aux femmes la possibilité de répartir les paiements pour ces produits sur une durée de plus de cinquante périodes hebdomadaires plus que double le montant maximal de VDP.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Similar content being viewed by others

References

  • Ariely, D., Loewenstein, G. and Prelec, D. (2003) “Coherent arbitrariness”: Stable demand curves without stable preferences. Quarterly Journal of Economics 118(1): 73–105.

    Article  Google Scholar 

  • Becker, G., DeGroot, M. and Marschak, J. (1964) Measuring utility by a single-response sequential method. Behavioral Science 9: 226–236.

    Article  Google Scholar 

  • Bensch, G., Grimm, M. and Peters, J. (2015) Why do households forego high returns from technology adoption? Evidence from improved cooking stoves in Burkina Faso. Journal of Economic Behavior & Organization 116: 187–205.

    Article  Google Scholar 

  • Berry, J., Fischer, G. and Guiteras, R. (2015) Eliciting and Utilizing Willingness to Pay: Evidence from Field Trials in Northern Ghana, http://ibread.org/bread/system/files/bread_wpapers/459.pdf, accessed 10 December 2015.

  • Dupas, P. (2011) Health behavior in developing countries. Annual Review of Economics 3: 425–449, doi:10.1146/annurev-economics-111809-125029.

    Article  Google Scholar 

  • Fudenberg, D., Levine, D.K. and Z. Maniadis (2012) On the robustness of anchoring effects in WTP and WTA experiments. Journal of the American Economic Association: Microeconomics 4(2): 131–145.

    Google Scholar 

  • Furukawa, C. (2014) Do solar lamps help children study? Contrary evidence from a pilot study in Uganda. The Journal of Development Studies 50(2): 319–341.

    Article  Google Scholar 

  • Grimm, M., Munyehirwe, A., Peters, J. and Sievert, M. (2016) A first step up the energy ladder? Low cost solar kits and household’s welfare in rural Rwanda. World Bank Economic Review, doi:10.1093/wber/lhw052.

    Article  Google Scholar 

  • Guiteras, R., Levine, D.I., Polley, T. and Quistorff, B. (2013) Credit constraints, present bias and investment in health: Evidence from micropayments for clean water in Dhaka. Working paper.

  • Horowitz, J. K. (2006) The Becker–DeGroot–Marschak mechanism is not necessarily incentive compatible, even for non-random goods. Economics Letters 93(1): 6–11.

    Article  Google Scholar 

  • Jameel Poverty Action Lab (2011) The Price is Wrong. Cambridge: Jameel Poverty Action Lab.

  • Kaas, K.P. and Ruprecht, H. (2006) Are the Vickrey auction and the BDM mechanism really incentive compatible? Empirical results and optimal bidding strategies in cases of uncertain willingness-to-pay. Schmalenbach Business Review (SBR) 58: 37–55.

    Article  Google Scholar 

  • Mobarak, A.M., Dwivedi, P., Bailis, R., Hildemann, L. and Miller, G. (2012). Low demand for nontraditional cookstove technologies. PNAS 109(27): 10815–10820.

    Article  Google Scholar 

Download references

Acknowledgements

The authors thank Sascha Huijsman, MBK Ventura, and the University of Indonesia for their excellent research assistance.

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Robert Lensink.

Appendix

Appendix

See Table A1.

Table A1 Determinants of maximum WTP, using same sample size per product

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Lensink, R., Raster, T. & Timmer, A. Liquidity Constraints and Willingness to Pay for Solar Lamps and Water Filters in Jakarta. Eur J Dev Res 30, 577–587 (2018). https://doi.org/10.1057/s41287-017-0078-3

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1057/s41287-017-0078-3

Keywords

Navigation