Hostname: page-component-78c5997874-mlc7c Total loading time: 0 Render date: 2024-11-14T05:22:38.889Z Has data issue: false hasContentIssue false
  • English
  • Français

The Endowment Effect and WTA: A Quasi-Experimental Test

Published online by Cambridge University Press:  28 April 2015

H.F. MacDonald  and
J.M. Bowker
H.F. MacDonald
Affiliation:
Department of Agricultural and Applied Economics, University of Georgia
J.M. Bowker
Affiliation:
USDA Forest Service Southeastern Experiment Station, Athens, Georgia 30602
Get access Rights & Permissions [Opens in a new window]

Abstract

This paper reports a test of the endowment effect in an economic analysis of localized air pollution. Regression techniques are used to test the significance of perceived property rights on household WTP for improved air quality versus WTA compensation to forgo an improvement in air quality. Our experiment contributes to the research into the WTP/WTA divergence by providing a new basis for supporting the existence of an endowment effect. Our results are in contrast to recent work by Shogren et al. which supports the substitution proposition of Hanemann while rejecting the endowment effect.

Keywords

contingent valuationendowment effectproperty rightssubstitution effect
Type
Articles
Information
Journal of Agricultural and Applied Economics , Volume 26 , Issue 2 , December 1994 , pp. 545 - 551
Copyright
Copyright © Southern Agricultural Economics Association 1994

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Adamowicz, W.L. “Valuation of Environmental Amenities.” Staff Paper 91-06. Edmonton: University of Alberta, Department of Rural Economy. 1991.Google Scholar
Bowker, J.M. and MacDonald, H.F.. “An Economic Analysis of Localized Air Pollution: Rendering Emissions in a Residential Setting.” Canadian J. Agr. Econ. 41(1993):45–59.CrossRefGoogle Scholar
Brookshire, D.S., Randall, A., and Stoll, J.R.. “Valuing Increments and Decrements in Natural Resource Service Flows.” Amer. J. Agr. Econ. 62(1980):478–488.CrossRefGoogle Scholar
Coursey, D.L., Hovis, J. and Shulze, W.D.. “The Disparity Between Willingness to Accept and Willingness to Pay Measures of Value.” Qtrly. J. Econ. 102(1987):679–90.CrossRefGoogle Scholar
Hanemarm, W.M. “Willingness to Pay and Willingness to Accept: How Much Can They Differ?” Amer. Econ. Rev. 81(1991):635–47.Google Scholar
Knetsch, J.L. “The Endowment Effect and Evidence of Nonreversible Indifference Curves.” Amer. Econ. Rev. 79(1989): 1277–84.Google Scholar
Knetsch, J.L. “Environmental Policy Implications of Disparities Between Willingness to Pay and Compensation Demanded Measures of Values.” J. Environ. Econ. and Manage. 18(1990):227–37.CrossRefGoogle Scholar
Knetsch, J.L. and Sinden, J.A.. “Willingness to Pay and Compensation Demanded: Experimental Evidence of an Unexpected Disparity in Measures of Value.” Qtrly. J. Econ. 99(1984):507–21.CrossRefGoogle Scholar
Kahneman, D., Knetsch, J.L, and Thaler, R.. “Experimental Tests of the Endowment Effect and the Coase Theorem.” J. Polit. Econ. 98( 1990): 1325–34.CrossRefGoogle Scholar
Macnab, B.J. and Adamowicz, W.L.. “Two Experiments on the Difference Between Willingness to Pay and Willingness to Accept.” Staff Paper 90-02. Edmonton: University of Alberta, Department of Rural Economy. 1991.Google Scholar
Mitchell, R.C. and Carson, R.T.. Using Surveys to Value public Goods: The Contingent Valuation Method. Washington, D.C: Resources for the Future. 1989.Google Scholar
Randall, A. and Stoll, J.R.. “Consumer's Surplus in Commodity Space.” Amer. Econ. Rev. 66(1980):589–97.Google Scholar
Roberts, R.K., Douglas, P.V. and Park, W.M.. “Estimating External Costs of Municipal Landfill Siting Through Contingent Valuation Analysis: A Case Study.” S.J. Agr. Econ. 23(1991): 155–65.Google Scholar
Shogren, J.F., Shin, S.Y., Hayes, D.J., and Kliebenstein, J.B.. “Resolving Differences in Willingness to Pay and Willingness to Accept.” Amer. Econ. Rev. 84(1994):255–270.Google Scholar
Shulze, W.D., d'Arge, R.C., and Brookshire, D.S.. “Valuing Environmental Commodities: Some Recent Experiments.” Land Econ. 57( 1981): 151–169.CrossRefGoogle Scholar
Snedecor, G.W. and Cochran, W.G.. Statistical Methods, 7th ed. Ames, Iowa: The Iowa State University Press. 1980.Google Scholar
Thaler, R. “Toward a Positive Theory of Consumer Choice.” J. Econ. Behav. and Org. 1(1980):39–60.CrossRefGoogle Scholar
Willig, R. “Consumer's Surplus Without Apology.” Amer. Econ. Rev. 66(1976):589–97.Google Scholar