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In many empirical contingent valuation studies one finds that household size, i.e. the number of household members, isnegatively correlated with stated household willingness to pay for the realization of environmental projects. This observationis rather puzzling because in larger households more people can benefit from an environmental improvementthan in small households. Therefore, the overall benefit should be greater for larger households. A plausible explanationcould be that household budgets are tighter for large families than for smaller families with the same overall familyincome. The fact that larger families can afford only smaller willingness to pay statements in contingent valuationsurveys than smaller families with the same income and the same preferences might have consequences for the allocationof public funds whenever the realization of an environmental project is made dependent on the outcome of a contingentvaluation study. This paper shows how the use of household equivalence scales for the assessment of environmentalprojects with the contingent valuation method can serve to reduce the discrimination of members of large families.

Item Type: MPRA Paper -

Original Title: Considering household size in contingent valuation studies-

Language: English-

Keywords: contingent valuation and household size, willingness to pay, environmental project, family income, valuationservice, household equivalent scales.-

Subjects: D - Microeconomics > D6 - Welfare Economics > D61 - Allocative Efficiency ; Cost-Benefit AnalysisH - Public Economics > H4 - Publicly Provided Goods > H43 - Project Evaluation ; Social Discount RateQ - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q51 - Valuation of Environmental Effects-

Autor: Ahlheim, Michael


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