ABSTRACT
The citizen and consumer perspectives Up until now, I have mostly taken for granted that individual willingness to pay is a reasonable measure of ordinal utility. In the present chapter I will present a reason to doubt this: If an individual is capable of judging matters both from a personal well-being point of view, represented by his utility function, and from a social or ethical point of view, as represented by his own perception of the social welfare function, it can be difficult to know which point of view he has taken when reporting his WTP for an environmental change. If he reports WTP from a social point of view, his WTP does not reflect ordinal properties of this utility function. This is particularly relevant when measuring the value of non-market goods through direct methods like contingent valuation, and when the topic at hand is closely related to ethical and political issues. In other words, it is a problem that may be prominent in environmental valuation – particularly, presumably, when measuring existence values. Eliciting willingness to pay for non-market goods is, of course, hard. When answering survey questions, people may have incentives to strategically over-report or under-report their true willingness to pay; they may misinterpret the valuation question; they may forget to take their budget restrictions properly into account; and when using indirect valuation methods based on market behavior, heroic assumptions are often needed to estimate underlying demand for the non-market good of interest. So far, these problems have been largely overlooked, and for the most part I will continue ignoring them. The point I want to make is that even if respondents answer the valuation question conscientiously and honestly, WTP might not measure individual well-being changes. The basic theory of monetary utility measurement presented in Chapter 5 may seem to imply that for any given person and any given environmental
change there exists one true value, and that the problem of environmental valuation research is simply to recover this true value. Some philosophers and economists have disputed the idea that such true values exist. They have maintained that people do not possess explicit preferences for everything, implying that the individual may need to form new preferences to be able to respond to the valuation question at all; that even if people already possess the relevant preference structure, they may not be able to express those preferences in monetary units; and that valuing certain goods (like the closeness of a friendship) in monetary units will in itself reduce the good’s value.1 It has also been claimed that what people are willing to pay for may not be the environmental good as such, but a good conscience, and that the reported values do not really measure utility, but are rather attempts to translate one’s ethical or political views into monetary units.2 Sagoff (1988, p. 8) writes:
As a citizen, I am concerned with the public interest, rather than my own interest; with the good of the community, rather than simply the well-being of my family. [. . .] In my role as a consumer, [. . .] I pursue the goals I have as an individual.
