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Eliciting and Utilizing Willingness-to-Pay: Evidence from Field Trials in Northern Ghana

Author

Listed:
  • Berry, James
  • Fischer, Greg
  • Guiteras, Raymond P.

Abstract

Using the Becker-DeGroot-Marschak (BDM) mechanism, we estimate the willingness-to-pay (WTP) for and impact of clean water technology through a field experiment in Ghana. Although WTP is low relative to the cost, demand is relatively inelastic at low prices. In the short-run, treatment effects are positive—the incidence of children’s diarrhea falls by one third—and consistent throughout the WTP distribution. After a year, usage has fallen, particularly for those with relatively low valuations. Strikingly, the long-run average treatment effect is negative for those with valuations below the median. Combining estimated treatment effects with individual willingness-to pay measures implies households’ valuations of health benefits are much smaller than those typically used by policymakers. Finally, we explore differences between BDM and take-it-or-leave-it valuations and make recommendations for effectively implementing BDM in the field.

Suggested Citation

Handle: RePEc:ags:nccewp:273077
DOI: 10.22004/ag.econ.273077
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