Distortions in willingness-to-pay for public goods induced by endemic distrust in institutions

Research output: Contribution to journal › Journal article › Research › peer-review

Standard

Distortions in willingness-to-pay for public goods induced by endemic distrust in institutions. / Kassahun, Habtamu Tilahun; Swait, Joffre ; Jacobsen, Jette Bredahl.

In: Journal of Choice Modelling, Vol. 39, 100271, 2021.

Research output: Contribution to journal › Journal article › Research › peer-review

Harvard

Kassahun, HT, Swait, J & Jacobsen, JB 2021, 'Distortions in willingness-to-pay for public goods induced by endemic distrust in institutions', Journal of Choice Modelling, vol. 39, 100271. https://doi.org/10.1016/j.jocm.2021.100271

APA

Kassahun, H. T., Swait, J., & Jacobsen, J. B. (2021). Distortions in willingness-to-pay for public goods induced by endemic distrust in institutions. Journal of Choice Modelling, 39, [100271]. https://doi.org/10.1016/j.jocm.2021.100271

Vancouver

Kassahun HT, Swait J, Jacobsen JB. Distortions in willingness-to-pay for public goods induced by endemic distrust in institutions. Journal of Choice Modelling. 2021;39. 100271. https://doi.org/10.1016/j.jocm.2021.100271

Author

Kassahun, Habtamu Tilahun ; Swait, Joffre ; Jacobsen, Jette Bredahl. / Distortions in willingness-to-pay for public goods induced by endemic distrust in institutions. In: Journal of Choice Modelling. 2021 ; Vol. 39.

Bibtex

@article{2c09be5a2c594ee28734a9adb744b38e,
title = "Distortions in willingness-to-pay for public goods induced by endemic distrust in institutions",
abstract = "In this paper, we analyze the implications for the economic valuation of the provision of public goods, considering respondents' perceptions of the institution(s) that provide the service. The specific behavioral mechanism whereby institutional distrust (ID) shows itself is through the activation of screening of choice options (choice set formation). However, ID-induced choice set formation might be confounded with the consumer budget constraint, especially in a developing country context, leading to biased welfare estimates for service improvement. We formulate a semi-compensatory hybrid choice set formation (SC-HCSF) model that enables us to 1) discriminate the effect of a budget constraint from that of ID-induced choice set formation and 2) characterize their separate impacts on welfare estimates using a spatial framework. We compare our model results to those from a standard Random Parameters Logit (RPL) Model. The RPL underestimates (overestimates) welfare when individuals have a low (high) ID. Based on our empirical model results, we demonstrate that the impacts of ignoring institutional trust issues can be highly deleterious to project appraisals, particularly in settings where legislative and regulatory institutions are perceived to be endemically corrupt.",
author = "Kassahun, {Habtamu Tilahun} and Joffre Swait and Jacobsen, {Jette Bredahl}",
year = "2021",
doi = "10.1016/j.jocm.2021.100271",
language = "English",
volume = "39",
journal = "Journal of Choice Modelling",
issn = "1755-5345",
publisher = "University of Leeds",

}

RIS

TY - JOUR

T1 - Distortions in willingness-to-pay for public goods induced by endemic distrust in institutions

AU - Kassahun, Habtamu Tilahun

AU - Swait, Joffre

AU - Jacobsen, Jette Bredahl

PY - 2021

Y1 - 2021

N2 - In this paper, we analyze the implications for the economic valuation of the provision of public goods, considering respondents' perceptions of the institution(s) that provide the service. The specific behavioral mechanism whereby institutional distrust (ID) shows itself is through the activation of screening of choice options (choice set formation). However, ID-induced choice set formation might be confounded with the consumer budget constraint, especially in a developing country context, leading to biased welfare estimates for service improvement. We formulate a semi-compensatory hybrid choice set formation (SC-HCSF) model that enables us to 1) discriminate the effect of a budget constraint from that of ID-induced choice set formation and 2) characterize their separate impacts on welfare estimates using a spatial framework. We compare our model results to those from a standard Random Parameters Logit (RPL) Model. The RPL underestimates (overestimates) welfare when individuals have a low (high) ID. Based on our empirical model results, we demonstrate that the impacts of ignoring institutional trust issues can be highly deleterious to project appraisals, particularly in settings where legislative and regulatory institutions are perceived to be endemically corrupt.

AB - In this paper, we analyze the implications for the economic valuation of the provision of public goods, considering respondents' perceptions of the institution(s) that provide the service. The specific behavioral mechanism whereby institutional distrust (ID) shows itself is through the activation of screening of choice options (choice set formation). However, ID-induced choice set formation might be confounded with the consumer budget constraint, especially in a developing country context, leading to biased welfare estimates for service improvement. We formulate a semi-compensatory hybrid choice set formation (SC-HCSF) model that enables us to 1) discriminate the effect of a budget constraint from that of ID-induced choice set formation and 2) characterize their separate impacts on welfare estimates using a spatial framework. We compare our model results to those from a standard Random Parameters Logit (RPL) Model. The RPL underestimates (overestimates) welfare when individuals have a low (high) ID. Based on our empirical model results, we demonstrate that the impacts of ignoring institutional trust issues can be highly deleterious to project appraisals, particularly in settings where legislative and regulatory institutions are perceived to be endemically corrupt.

U2 - 10.1016/j.jocm.2021.100271

DO - 10.1016/j.jocm.2021.100271

M3 - Journal article

VL - 39

JO - Journal of Choice Modelling

JF - Journal of Choice Modelling

SN - 1755-5345

M1 - 100271

ER -

ID: 259875163