disparity. Kahneman et al. 1991 postulate the endowment effect as a manifestation of an asym-
metry in value which Kahneman and Tversky 1984 refer to as loss aversion. They argue that
losses are being weighted substantially more than gains, and consequently, people will often demand
more compensation to forego a good in their possession than they will be willing to pay to gain
the same good. Following the work of Hanemann 1991, Shogren et al. 1994 offers a further ex-
planation. They argue that the valuation disparity relates to a substitution effect. That is, a disparity
occurs when a good has imperfect substitutes, and the divergence between WTP and WTA expands
as the degree of substitution decreases. A further and much less explored explanation for the valua-
tion disparity is offered by Boyce et al. 1992. They argue that the valuation disparity relates to
intrinsic values.
In an experiment designed to investigate the hypothesis that the introduction of intrinsic values
will create or increase the valuation disparity, Boyce et al. compared four conditions. In the first
set of conditions respondents were asked their WTP to purchase a small Norfolk pine tree which
they could obtain for use as a house plant, or given a tree and asked their WTA to sell the tree
back to the experimenter. To add intrinsic value to preserving the life of the tree, two analogous
conditions were introduced in which the tree would be killed if respondents either failed to
purchase the tree, or sold the tree back to the experimenter. In the experiment, they found that
WTA generally exceeded WTP for both the kill and no-kill conditions, but that the kill condition
exacerbated the disparity between WTP and WTA.
Boyce et al. offer an explanation for the WTP – WTA disparity in the kill scenario by equating
moral responsibility with intrinsic value. They argue that the assignment of property rights shifts
the allocation of moral responsibility for preserv- ing the tree. Thus, intrinsic values are deemed to
be included in WTA measures because the sellers hold the property rights and view themselves as
being responsible for the death of the tree. They are partially excluded from WTP measures, how-
ever, because the buyers do not hold the property rights and they may view the responsibility as
resting at least partially in the hands of the experimenter.
In this paper we present an experiment that tests for the valuation disparity, using convention-
ally produced eggs, and in some treatments, using non-conventional referred to hereafter as ecologi-
cal eggs and informing participants in the experi- ment that these were derived from an animal and
environmentally ‘friendly’ production process. Thus, the experiment is similar to the Boyce et al.
study in that we add a moral dimension to some of the treatments. Our experiment, however, has
been designed to observe whether people place a monetary value, not only on the consumption of
eggs, but also, on the welfare of hens producing ecological eggs and on the environment. Thus, it
is our contention that it is the assignment of moral responsibility associated with an assign-
ment of property rights, giving rise to expressions of intrinsic value, that explains the valuation
disparity.
2. The experiment — a theoretical background
Following the experimental design of Boyce et al. we compared four conditions in our experi-
ment. In the first set of conditions, participants were asked either to submit bids to purchase a
single half-dozen carton of conventionally pro- duced eggs, or they were given a carton of eggs
and then asked to submit offers to sell the eggs back to the experimenter. A moral dimension
related to the welfare of the hens and the quality of the environment was added as follows. In the
second set of conditions participants were in- formed about the welfare-enhancing process of
producing ecological eggs, and under conditions analogous to the first set of conditions, asked
either to submit a bid to purchase the eggs, or to submit an offer to sell the eggs. Thus, there is a
broader moral dimension in our experiment as compared to the Boyce et al. experiment. In the
first set of conditions, the participants were given no information concerning the production process
of conventional eggs.
In both sets of conditions, the property rights implied by the WTP and WTA measures were
clearly assigned to either the experimenter or the participants. That is, participants were assigned
rights to the eggs in the WTA conditions, while in the case of those asked to submit an offer in the
WTP conditions, they were assigned no rights to the eggs. The relationship between WTP and
WTA measures and property rights has been thoroughly discussed in the context of contingent
valuation Mitchell and Carson, 1989; Schmid, 1995; Vadnjal, 1995; Vatn and Bromley, 1995
and environmental economics more generally Randall, 1987; Freeman, 1993. However, the
idea that there is a moral responsibility compo- nent associated with the assignment of property
rights appears to have received much less atten- tion in the literature.
Boyce et al. explains the relationship between property rights and moral responsibility, suggest-
ing the assignment of property-rights may affect the participants’ perception of the allocation of
moral responsibility. We interpret the ecological egg conditions in a similar way to that of Boyce et
al. In the WTP condition, moral responsibility for the welfare of the hens may be viewed by partici-
pants as resting partially in the hands of the experimenter, and in the WTA condition, moral
responsibility for the welfare of the hens and the environment, may be viewed by participants as
resting with themselves. However, there are sev- eral notable similarities and differences between
the experimental setting of the Boyce et al. study and our study.
One difference relates to the informational con- text in which the two experiments are set. In the
Boyce et al. study, in the WTA condition at least, there was a clear and strong allocation of moral
responsibility, in that participants could avoid the tree being killed by not allowing the tree to be
sold. In our study, however, the allocation of moral responsibility is less clear and weaker, in as
far as respondents are not capable of directly influencing the welfare of ecological egg-produc-
ing hens or the environment. In other words, the participants’ perceptions of the allocation of
moral responsibility relates to the welfare of these hens and the environment rather than the ecologi-
cal eggs themselves. Thus, there is arguably an indirect and possibly weaker allocation of moral
responsibility in our experiment compared with the Boyce et al. study.
Secondly, while we stressed the animal welfare aspect associated with the production of ecologi-
cal eggs, it is recognised that participants might also attach intrinsic value to more general and
associated environmental improvements.
Thirdly, Boyce et al. acknowledge that there may be an element of moral responsibility in the
WTA-no kill condition as long as participants feel that they would be able to take better care of the
tree than the experimenter were they to sell the tree. Thus, they suggest that some of the moral
responsibility argument may apply to the treat- ments in which the trees are not killed. In our
experiment, however, the allocation of moral re- sponsibility relates to the welfare aspects of eco-
logical-egg production. There would, therefore, seem to be little likelihood of participants feeling
any degree of moral responsibility in the WTA condition for the welfare aspects of conventional
egg production.
Fourthly, Boyce et al. suggest that the asym- metrical assignment of responsibility may affect
values so that WTA values will exceed WTP values. In our study, we similarly propose that a
valuation disparity may occur due to the alloca- tion of moral responsibility in the case of ecologi-
cal eggs. However, the Boyce et al. interpretation of intrinsic value, and hence their equating it with
moral responsibility, remains vague. There have been numerous meanings assigned to intrinsic
value, beginning with Krutilla 1967 and others Routley and Routley, 1979; Brookshire et al.
1986; Callicot, 1986; Hare, 1987; Norton, 1987; Rolston, 1988; Mitchell and Carson, 1989; ICUN,
1990
causing considerable
misunderstanding Green et al., 1990; O’Neill, 1993; Aldred, 1994.
To avoid any unnecessary confusion; intrinsic value is referred to, in the context of our experi-
ment, as the value participants attach to welfare changes that are not directly related to changes in
their own welfare but rather to recognition of the welfare inherent in ecological egg producing hens
and the environment. In the ecological egg condi- tions, intrinsic value is associated with the value
participants attach, not to the consumption of the eggs, but to knowing or believing they are indi-
rectly influencing or supporting ecological-egg production.
Fifthly, while Boyce et al. use an extraordinary comprising the killing of a tree, ours is a normal
good. Finally, following Boyce et al., our suggestion
that the valuation disparity has moral dimensions is intended to supplement rather than replace
Kahneman et al. 1991 notion of an endowment effect. That is, in both the conventional and eco-
logical egg conditions, loss aversion may result in participants demanding more compensation to
forego their eggs compared with the amount of money they are willing to pay to gain the eggs.
But it is the assignment of moral responsibility in the ecological egg conditions that may lead to an
increase in the disparity between WTP and WTA.
Thus, with these comments in mind, it is our contention that the assignment of moral responsi-
bility in the ecological egg E conditions WTA-E and WTP-E will cause a larger disparity between
WTP and WTA as compared with the conven- tional egg C conditions WTA-C and WTP-C.
3. The experiment
