Working Paper: NBER ID: w15366
Authors: Mary F. Evans; Christine Poulos; V. Kerry Smith
Abstract: Individuals who are likely to realize the largest benefits from improvements in air quality often depend on other members of their households to make time or monetary contributions to their care. The presence of these dependency relationships among household members poses challenges for benefit estimation since it is unlikely that the conditions necessary for recovering the underlying individual preferences from household choices are satisfied in this setting. We propose a conceptual framework that highlights the role of these dependencies in the choice models used to estimate the willingness to pay for environmental quality improvements. We design a complementary stated preference survey that describes hypothetical dependency relationships for household members of different ages to test the implications of our conceptual model. Respondents' choices take into account the care-giving responsibilities for young children and teenagers but not for older adults.
Keywords: Air Pollution; Household Economics; Willingness to Pay; Environmental Policy
JEL Codes: H41; Q51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| caregiving responsibilities for young children (J13) | choices regarding air quality improvements (Q58) |
| caregiving responsibilities for teenagers (J13) | choices regarding air quality improvements (Q58) |
| type of dependent (child vs. older adult) (J13) | economic decisions made by the caregiver (D14) |
| age of the household member benefiting from environmental improvement (D15) | respondent's WTP (Q26) |
| framing of stated choice questions (C25) | respondents' choices (C25) |