Andersson, Henrik, Hammitt, James K., Lindberg, Gunnar and Sundström, Kristian (2011) Willingness to Pay and Sensitivity to Time Framing: A Theoretical Analysis and an Application on Car Safety. TSE Working Paper, n. 11-271

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Stated preference (SP) surveys attempt to obtain monetary values for non-market goods that reflect individuals’ “true” preferences. Numerous empirical studies suggest that monetary values from SP studies are sensitive to survey design and so may not reflect respondents’ true preferences. This study examines the effect of time framing on respondents’ willingness to pay (WTP) for car safety.We explore how WTP per unit risk reduction depends on the time period over which respondents pay and face reduced risk in a theoretical model and by using data from a Swedish contingent valuation survey. We find that WTP is sensitive to time framing; the theoretical model predicts that the effect is likely to be nontrivial, and empirical estimates from an annual scenario are about 70 percent higher than estimates from a monthly scenario.

Item Type: Monograph (Working Paper)
Date: October 2011
Uncontrolled Keywords: Car safety, Contingent valuation, Time frame, Willingness to pay
JEL Classification: C52 - Model Evaluation and Selection
D6 - Welfare Economics
I1 - Health
Q50 - General
Divisions: TSE-R (Toulouse)
Site: UT1
Date Deposited: 09 Jul 2014 17:22
Last Modified: 02 Apr 2021 15:47
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