IDEAS home Printed from https://ideas.repec.org/a/cup/jbcoan/v15y2024is1p183-205_9.html
   My bibliography  Save this article

Citizen Preferences and BCA: A Model of Willingness-to-Pay behind a Veil of Ignorance

Author

Listed:
  • Beeson, Morgan
  • Chilton, Susan
  • Metcalf, Hugh
  • Nielsen, Jytte Seested

Abstract

Public sector allocative decisions should reflect, as far as possible, the preferences of those affected by the decisions. Conventional benefit–cost analysis (BCA) will simply aggregate individuals’ private willingness-to-pay (WTP) over all affected individuals to estimate the total benefits of a policy that delivers a public good. Given the nature of a public good, it is not unreasonable to consider that an individual may have altruistic preferences over the consumption of the public good by others. In this paper, we set out the theoretical underpinnings for a new citizen-based WTP, informed by political philosophy. Our model extends the standard social utility model (Bergstrom, 2006) of WTP for a public good when individuals are altruists by incorporating a Veil of Ignorance (VoI; Harsanyi, 1955). Our findings show that our WTP (Citizen) correctly includes altruistic as well as distributional preferences of individuals in society into WTP for use in a BCA. When WTP (Citizen) are aggregated for use in a BCA, equal weight is given to each individual’s preference and the BCA will correctly identify potentially Pareto-improving projects in a consistent manner.

Suggested Citation

  • Beeson, Morgan & Chilton, Susan & Metcalf, Hugh & Nielsen, Jytte Seested, 2024. "Citizen Preferences and BCA: A Model of Willingness-to-Pay behind a Veil of Ignorance," Journal of Benefit-Cost Analysis, Cambridge University Press, vol. 15(S1), pages 183-205, December.
    • Handle: RePEc:cup:jbcoan:v:15:y:2024:i:s1:p:183-205_9
    as

    Download full text from publisher

    File URL: https://www.cambridge.org/core/product/identifier/S2194588824000423/type/journal_article
    File Function: link to article abstract page
    Download Restriction: no
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cup:jbcoan:v:15:y:2024:i:s1:p:183-205_9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Kirk Stebbing (email available below). General contact details of provider: https://www.cambridge.org/bca .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.