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Willingness to pay or willingness to accept? An experimental study on secondhand smoke

Author

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  • Eleanya Nduka

    (Department of Economics, University of Exeter)

Abstract

The anomaly between willingness to pay (WTP) and willingness to accept (WTA) invokes a well-established discussion in the stated preference literature. The debate involves which of the two is a better welfare measure. Although a few studies have tried to provide some insights, many researchers settle for eliciting WTP rather than WTA. However, WTA is a better welfare measure in some circumstances, especially in situations involving spillover effects and property rights. We investigate one of such situations and provide insights into how individuals in heterogeneous healthcare systems (private (U.S.) and public (U.K.)) value the effects of a spillover. First, we use choice experiments and contingent valuation techniques to quantify the attributes of secondhand smoke (SHS) health risks, focusing on generating crosscountry comparisons. We then compare the WTP and WTA welfare estimates. We find that agents differ significantly in valuing "external" health risks. Hence, this study uncovers an aspect of health risks valuation lacking in the literature. We also find that the two welfare measures differ significantly; thus, we contribute to the ongoing debate between WTP and WTA.

Suggested Citation

  • Eleanya Nduka, 2021. "Willingness to pay or willingness to accept? An experimental study on secondhand smoke," Discussion Papers 2108, University of Exeter, Department of Economics.
    • Handle: RePEc:exe:wpaper:2108
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    File URL: https://exetereconomics.github.io/RePEc/dpapers/DP2108.pdf
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    More about this item

    Keywords

    secondhand smoke; health risks; WTP; WTA; choice experiment; contingent valuation;
    All these keywords.

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q53 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
    • I12 - Health, Education, and Welfare - - Health - - - Health Behavior

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