CERE Working Papers, CERE - the Center for Environmental and Resource Economics
Relative income and the WTP for public goods - A case study of forest conservation in Sweden
Abstract: The main objective with this paper is to test the
hypothesis that peoples stated WTP for an environmental public good (old
growth forest in Sweden) are sensitive to the respondents’ relative income.
To do that I use an experimental valuation question in a split-sample
setting, conditioning the respondents on hypothetical changes in their
absolute and relative income. The results indicate that the relevant income
measure may not only be the income level per se, but also the income level
relative to others. People with green attitudes and males react more
strongly to changes in their relative position than others. The results
stress that growth in incomes may not be a guaranty for growth in WTP, the
distribution of growth also matter.
Keywords: contingent valuation; income-effect; social responsibility; relative income; (follow links to similar papers)
JEL-Codes: C81; D12; D31; D64; Q20; (follow links to similar papers)
18 pages, September 9, 2014
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