Scandinavian Working Papers in Economics

Working papers in Transport Economics,
CTS - Centre for Transport Studies Stockholm (KTH and VTI)

No 2014:8: Response to a social dilemma : an analysis of the choice between an economic and an environmental optimum in a policy making context

Lena Nerhagen (), Roger Pyddoke () and Johanna Jussila Hammes ()
Additional contact information
Lena Nerhagen: VTI, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden
Roger Pyddoke: VTI, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden
Johanna Jussila Hammes: VTI, Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden

Abstract: Many countries have begun to require benefit-cost analysis as a way of informing key regulatory decisions. However, its actual use seem to be limited, especially in the area of environmental, health, and safety regulation. Reasons for this seem to be lack of knowledge and experience among decision makers and that established quality objectives prevent the use of this type of analysis and deliberation. We present the results from an experiment designed to investigate choice behavior in a public sector context. Students with different academic majors were asked to act as decision makers. There were two choice situations: one in a municipality deciding on an action plan and one in a government agency having to propose a national limit value. In both settings, the outcome that would pass a benefit-cost test would not achieve a natural state of the environment, hence a social dilemma choice situation. We find that a majority of the respondents prefer outcomes that can be considered environmental “optimum” but that there is a difference depending on academic major. The choice context also influences the response behavior and so does the information about an international standard. The latter increases the likelihood to accept alternatives that imply higher costs.

Keywords: Benefit-cost analysis; Policy making; Environmental quality objectives; Discrete-choice analysis; Willingness-to-pay

JEL-codes: R40

32 pages, April 29, 2014

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CTS2014-8.pdf PDF-file 

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