Comparing Willingness-to-Pay and Subjective Well-Being in the Context of Non-Market Goods

Paul Dolan and Robert Metcalfe ()

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: In order to value non-market goods, economists estimate individuals' willingness to pay (WTP) for these goods using revealed or stated preference methods. We compare these conventional approaches with subjective well-being (SWB), which is based on individuals' ratings of their happiness or life satisfaction rather than on their preferences. In the context of a quasi- experiment in urban regeneration, we find that monetary estimates from SWB data are significantly higher than from revealed and stated preference data. Stigma in revealed preferences, mental accounting in stated preferences and unspecified duration in SWB ratings might explain some of the difference between the valuation methods.

Keywords: willingness to pay; preferences; life satisfaction; subjective well-being; nonmarketgoods (search for similar items in EconPapers)
JEL-codes: C21 D61 D62 H23 Q51 (search for similar items in EconPapers)
Date: 2008-10
New Economics Papers: this item is included in nep-dcm and nep-hap
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Citations: View citations in EconPapers (32)

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