318 K. Nyborg J. of Economic Behavior Org. 42 2000 305–322
In recent CVM literature, it is usually recommended to use the referendum format for the valuation question.
24
Arrow et al. 1993 argue that this format resembles the situation in actual referenda, which consumers at least in USA do have some experience with. If it is
common to take a social point of view when voting, however, one would expect a referendum frame to induce some respondents to apply their social welfare functions. Moreover, in this
case it would be natural to assume that others are also going to pay, though increased taxes. This would imply less ‘anomalies’ than a sole responsibility framing, but reported values
may still not reflect personal well-being.
Some authors e.g., Freeman, 1993 argue that the referendum format is familiar to respondents because it resembles the situation when deciding whether or not to buy items in
the marketplace. This analogy, however, may induce respondents to take, instead, a personal point of view. Thus, although the referendum format may make respondents’ situation more
familiar than open-ended questions, the role ambiguity remains.
9. WTP as input into a social welfare function
The aim of a CVM study is usually to measure the social benefits of changing the public good supply. This benefit measure may then be incorporated into a cost–benefit analysis.
However, for this purpose, it is indeed important to know whether people have reported personal or social values.
To illustrate this, assume that all individuals report their marginal social values from a shared responsibility point of view, a
j
. From Eq. 5.1, we know that the sum of these values is given by
X
j ∈N
a
j
= X
j ∈N
γ
j
β
j
1y = 1y X
j ∈N
P
i∈N
∂V
j
∂ω
j i
∂ν
j
∂y P
i∈N
∂V
j
∂ω
j i
∂ν
j
∂x
i
9.1 Can this be interpreted as a monetary measure of social benefits? To do so, one must first
be willing to postulate a ‘meta’ social welfare function, obtained by aggregating individual social welfare judgments. Further, we need to assume that such judgments of social welfare
are cardinal and interpersonally comparable, and that each person’s judgment should have an equal weight in the meta social welfare function. These are obviously very unconventional
assumptions, although similar assumptions are frequently made about well-being functions. Traditional unweighted cost-benefit analysis, for example, is based upon the utilitarian
normative view that social welfare is defined by the sum of individual well-being, and that all individuals have the same marginal well-being of income. Interpreting
P a
j
as a monetary measure of social benefits would, rather, correspond to a moral philosophy in
which social benefit is defined by citizens’ judgments of projects’ overall effects, giving very little emphasis to individuals’ accounts of effects on their own well-being. It would
undoubtedly be possible to develop a coherent philosophical framework for this; but one
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This means that respondents should be asked a yesno-question like “Would you be willing to pay x to ensure y?” rather than open-ended questions like “What is the maximum amount you would be willing to pay to ensure
y?”
K. Nyborg J. of Economic Behavior Org. 42 2000 305–322 319
would require quite another theoretical foundation than the one provided by the theory of cost-benefit analysis.
To be able to interpret aggregate WTP, however, the researcher must know whether respondents reported their social or personal values. The problem is really one of adding
apples and oranges: Personal values, and shared and sole responsibility social values, are conceptually different, and adding them up does not make much sense. If, for example,
some respondents report their sole responsibility social values, while others report their personal values, one gets a ‘double-counting’ of the interests of those who report their
private valuations. This is quite similar to the case of unique, but altruistic preferences Milgrom, 1993; Johansson, 1993, but the interpretation is different: in the present model,
all respondents are assumed to have both social and personal preferences. The reason why two respondents report different kinds of values is not necessarily that they have different
preferences, such as being more or less altruistic, but rather that they interpreted the context of the survey differently.
Hence, if individuals’ preferences are as modelled here, the researcher needs to make sure that respondents take the same point of view. By framing the questionnaire care-
fully, asking explicitly for personal or social values, and including follow-up questions concerned with respondents’ motives, much of the role ambiguities can presumably be
removed. However, how this can be done in practice is outside the scope of this paper.
Since the underlying logic of cost–benefit analysis is based on aggregating individual well-being effects, it seems that it is the personal values that are relevant for this purpose.
However, eliciting personal values poses problems on its own. If people find it natural to take a social point of view when faced with certain environmental issues, respondents may
find it offensive that researchers actively try to persuade them to focus on their own interests instead. It is even conceivable that widespread practice of valuation studies encouraging
respondents to think ‘selfishly’ might contribute to a decay of social norms concerning environmental behavior.
10. Concluding remarks
