Public goods and the value of product quality regulations: the case of food safety

The paper examines preferences for product quality regulations. Our premise is that preferences for product quality regulations derive from preferences for both private and public goods. The model is used to explain public attitudes toward a referendum measure to eliminate pesticide residues on food. Results from a survey of consumers are consistent with the conceptual model and show that preferences for public goods influence support for the product quality regulation. The results help explain why consumption behavior is a poor predictor of political behavior, and have implications for methods that use voting and market behavior to value public goods.     

Choosing Between Internet and Mail Survey Modes for Choice Experiment Surveys Considering Non-Market Goods

In a choice experiment setup considering a non-market good, this paper adds to the literature on survey mode effects by providing evidence that internet surveys can be a viable alternative to traditional mail surveys when gathering feedback from a sample of respondents. The case study concerns preferences for protecting different types of landscape from road encroachment when building new motorways in Denmark. Two samples of respondents are surveyed—one by internet and one by mail. The performances of the two samples are compared over six different criteria; response rates, protest responses, demographics, preferences and WTP, estimation precision, and, finally, certainty in choice. Differences are observed for some of these criteria, implying that analysts should be aware that choosing internet over mail could be accompanied by a survey mode effect. However, the observed differences do not translate into significant differences in the unconditional WTP estimates. In most applied economic valuation studies of non-market goods, the main objective is in fact estimation of WTP. Hence, in the present case, the identified survey mode effects do not severely invalidate the applicability and continued use of the internet as a suitable means of collecting data for choice experiment economic valuation of non-market goods.     

WHAT DO CITIZENS THINK ABOUT PUBLIC ENTERPRISES? SUBJECTIVE SURVEY DATA ON THE LEGITIMACY OF THE ECONOMIC ACTIVITIES OF THE GERMAN PUBLIC SECTOR

We analyse the legitimacy of public enterprises that perform economic activities by focusing on the citizens’ subjective preferences, i.e. determining their political legitimacy. Using data from a representative survey conducted among 318 citizens of the German state of Rhineland‐Palatine, we explore determinants for the support of either privatisation efforts or the instrumental thesis, a widespread principle in German‐speaking countries, which considers public enterprises solely as instruments to fulfil economic policy objectives. Our results indicate that the respondents’ perception of the efficiency of public enterprises as well as their personal economic situation are important factors for the support of privatisation. The influential factors for the use of public enterprises as policy instruments are political ideology, the perception of a higher security of supplying goods and services as well as opinions regarding corporate social responsibility. The subjective preferences of a (democratic) country's citizens are thus an important reason why the public sector should or should not play an active part in providing goods and services. This can play an important role when decision makers from the public sector are keen to take into account the citizens’ approval or disapproval of privatisation measures.     

Optimal tax treatment of private contributions for public goods with and without warm glow preferences

Tax-favored contributions for financing some public goods may be a useful part of optimal nonlinear income tax and expenditure policy. There are two sides to the potential gain from subsidized donations. First, for a given level of public good provision, higher private donations from high earners than low earners eases the incentive compatibility constraint for donors and so can raise social welfare. This follows since considering a lower-paid job includes a perception of a drop in public good provision. Second, private donation reduces consumption, easing the resource constraint. This paper explores optimal policy, using first a model with standard preferences and then a model with a warm glow of giving. In addition to showing the conditions for the level of public goods, the paper considers the pattern of optimal subsidization across earnings levels. Analysis of optimal taxation with warm glow preferences is sensitive to the choice of preferences that are relevant for a social welfare evaluation. After considering optimal rules with formulations of social welfare which do and do not include warm glow utility, the paper considers the choice of normative criterion. Like the earlier literature, this paper assumes that organizing private donations is costless while tax collection has a deadweight burden. Since private charitable fundraising is very far from costless, the paper is an exploration of economic mechanisms, not a direct guide to policy.     

Uncertainty, Commitment, and Optimal Taxation

This paper examines the optimal tax design problem in the presence of wage uncertainty. The wage has a continuous distribution, individuals are ex ante identical, preferences are separable in labor supply and goods, public policy aims at providing the population with social insurance, and the only restriction on the tax instruments is that emanating from lack of public observability of realized wages and labor supplies. We show that optimal tax structures depend crucially on whether it is labor supply or goods that consumers have to commit to before the resolution of uncertainty. Specifically, we prove that, in the absence of commitment, the social insurance problem collapses to the traditional optimal tax problem. Second, if labor supply is precommitted, it would be possible to effect a first-best outcome. Third, commitment to goods would make indirect taxation a useful instrument of tax policy even in the presence of a general income tax; it requires differential tax treatment of committed and noncommitted goods. Finally, if preferences are separable between the two types of goods, precommitted goods must be taxed at a uniform rate lower than that on the noncommitted goods.     

Five proposals for a European model of the countryside

The inability of European institutions to reform the common agricultural policy is a landmark case of political failure. The CAP has led to several policy failures. It helps mainly the well-off farmers in a very wasteful way; it provides excessive incentives for non-competitive primary commodities, specialization and intensification, with adverse impacts on rural natural resources. Economic principles support long-term programmes aimed only at market failures: the respect of environmental norms and the provision of rural public goods in line with society's demands. While not interfering with market mechanisms, the instruments we propose acknowledge the diverse economic potential of European rural areas and the variety of goods and services provided by the rural space. Political feasibility and social concerns may require a transitory period of direct income support for current farmers. We argue, however, against any direct payments for new farmers in order to prevent future dependence on public support.
Large established farmers are those who stand to lose the most from our proposals. However, they and those who represent them have to face the inefficiencies of the current policy and society's demands. Farmers deserve rewards from public funds for the rural public goods they provide, but these rewards should be decoupled and targeted. A profound reform is required if we are to preserve a 'European model of the countryside'.     

The impact of targeting policy on spouses’ demand for public goods,labor supplies and sharing rule

This paper studies the impact of targeted unconditional cash transfers on the spouses’ demand for public goods, labor supplies and sharing of resources. We estimate a collective labor supply model with distributional factors which is extended to include preferences over marketable public goods (including child goods). In this way, unlike previous research, we consider the impact of such transfers on the intrahousehold allocation of resources and distinguish between the labeling and recipient effects. We exploit the UK experience and find evidence in favor of the collective model with separable preferences over labor supplies and public goods. This finding implies a recipient effect and not a labeling effect of child benefits. Given the household’s unearned income, the bigger the wife’s bargaining power, the more the resources allocated to public goods (including child goods) and the wife’s private consumption. The results can be useful in the design of family policy which aims to improve the relative welfare of children within the family and alleviate any intrahousehold consumption inequalities.     

A Nonparametric Revealed Preference Approach to Measuring the Value of Environmental Quality

We develop an approach to valuing non-market goods using nonparametric revealed preference analysis. We show how nonparametric methods can also be used to bound the welfare effects of changes in the provision of a non-market good. Our main context is one in which the non-market good affects the marginal utility of consuming a related market good. This can also be framed as a shift in the taste for, or quality of, the market good. A systematic approach for incorporating quality/taste variation into a revealed preference framework for heterogeneous consumers is developed. This enables the recovery of the minimal variation in quality required to rationalise observed choices of related market goods. The variation in quality appears as a adjustment to the price for related market goods which then allows a revealed preference approach to bounding compensation measures of welfare effects to be applied.     

Social preferences and voting: An exploration using a novel preference revealing mechanism

Public referenda are frequently used to determine the provision of public goods. As public programs have distributional consequences, a compelling question is what impact, if any, do social preferences have on voting behavior. This paper explores this issue using laboratory experiments wherein voting outcomes lead to a known distribution of net benefits across participants. Preferences are elicited using a novel Random Price Voting Mechanism (RPVM), which is more efficient in eliciting preferences than a dichotomous choice referendum but gives consistent results. Results suggest that social preferences, in particular a social efficiency motive, lead to economically meaningful deviations from selfish voting choices and increase the likelihood that welfare-enhancing programs are implemented.     

Are choice experiments reliable? Evidence from the lab

This study investigates whether a popular stated preference method, the choice experiment (CE), reliably measures individuals’ values for a good. We address this question using an induced value experiment. Our results indicate that CEs fail to elicit payoff maximizing choices. We find little evidence that increasing the salience of the choices or adding monetary incentives increase the proportion of payoff maximizing choices. This questions the increasing use of CE to value non-market goods for policy making.     

A comparative study of environmental amenity valuations

The paper reports on a comparative study of direct and indirect approaches to valuing environmental amenities (i.e., public goods), specifically, air quality in terms of its human health effects. The application of three indirect valuation methods (via market goods) is reported here: the health production method, a consumer preferences (for nonmarket goods) model, and the cost of illness method. The first and second methods are (economic) behavior-based approaches where willingness to pay for an environmental good is derived by exploiting relationships in consumption between the public good and market good(s). The third method is based on a physical relationship—a dose-response function—between the environmental good and health. The direct valuation approach encompassed three contingent valuation elicitation formats: open-ended, modified iterative bidding game, and referenda-style binary choice. The application of all four methods was based on data from a survey of a large, stratified sample of households from the Haifa metropolitan area in northern Israel. The estimates of welfare change derived by the various methods are discussed and compared.     

Terrorist threats,information disclosures,and consumer sovereignty

This paper proposes the use of consumers’ preferences in formulating policies for keeping secret information about terrorist activities and threats that might compromise future security. We report the results from two surveys indicating that support for government secrecy varies across situations depending on the threat and context. A majority of respondents preferred full disclosure of some information related to terrorist threats regardless of the consequences for specific industries or future threats, in particular threats involving attacks on commercial airlines. However a majority of respondents were willing to allow government authorities to withhold information about the details of threats to the financial system and to buildings if revealing the information might compromise future investigations. While the public generally recognizes the importance of keeping some information secret, a democratically elected government should seek to understand the preferences of its citizens on important policy issues related to public safety and security.     

论公共产品的市场提供

一般而言，满足消费者需求的消费品划分为两类，一类是用货币收入等价交换的消费品，即私人产品；一类是不以货币交换的消费品，即公共产品。私人产品只能由私人提供，公共产品只能由政府提供，这一分析结论所包含的政策含义往往导致公共产品供给决策绝对化和“一刀切”的倾向，把许多行业和商品纳入公共产品范畴由政府垄断性供给，由此导致资源配置效率和使用效率较低，因此。中国应加大公共产品提供的市场化改革步伐。     

Linking forestry, sustainability and aesthetics

In forest planning, little research has been devoted towards examining how visual-impact assessment can improve the public acceptance of forest activities and augment forest sustainability. The objective of the present work is to review the methods of aesthetic assessment of forest landscapes, which will help the implementation of visual-impact assessment in sustainable forestry. From the numerous techniques of landscape evaluation that have been devised in recent years, the expert approach techniques have dominated in environmental management practices and the perception-based approach in research. The non-market economic valuation techniques are essentially trade-off methods and not aesthetic assessments by themselves. Revealed preference methods, such as hedonic-price, use actual market choices of individuals to get their preferences towards non-market attributes, and stated preference methods, such as contingent valuation method, rely on surveys to get directly the individual's willingness to pay for the non-market attributes. Psychophysical preference modelling is a popular quantitative holistic technique of landscape evaluation and if used in combination with indirect aesthetic evaluation methods might create new standards and protocols for techniques of objectively estimating public perception of aesthetic quality and thus to enhance social sustainability in forest space.     

Fiscal rules and extrinsic uncertainty

Summary This paper analyzes the effect of two fiscal policy regimes on the set of equilibria. A general equilibrium model with public goods is used to re-examine Friedman's [9] proposal for fiscal reform. The issue is whether a constraint upon fiscal policy requiring budget balance under all contingencies increases the stability of the economy. Stability is modelled in terms of neutralizing extrinsic uncertainty or sunspots. The government consists of bureaus providing public goods. The budgetary rules entail fixed shares of revenues and arrangements for budget balancing. Existence of equilibrium and properties of the equilibrium set are established. The Friedmanite rules permit extrinsic uncertainty to affect outcomes, while a policy that allows the bureaus greater discretion in the pursuit of their objectives neutralizes it.This paper is based on Goenka [11]. I thank Larry Blume, David Easley, Roger Guesnerie, Christophe Préchac, Bruce Smith, and Steve Spear for helpful comments. I would especially like to thank Karl Shell for many discussions and advice, and Michael Woodford whose detailed comments have sharpened the paper. This paper has benefitted from presentations at Buffalo, Cornell, VPI, CMU, LSE, and the 1991 European meetings of the Econometric Society. Research support from N.S.F. Grant SES-8606944 and the Center for Analytic Economics at Cornell University is gratefully acknowledged. All errors are mine.     

A THEORETICAL FRAMEWORK FOR THE MEASUREMENT OF WELL-BEING

The conceptual framework of the system specifies that societal resources are limited by two basic factors: the amount of available human time, and the stock of wealth inherited from the past. Wealth is defined very broadly to cover not only the conventional tangible capital assets familiar to economists, but also intangible human and other capital assets, stocks of organizational capital reflected by networks of social support systems (the family, the neighbourhood), stocks of environmental assets (the sun and air), and stocks of socio-political assets (security, freedom of choice). Human time covers market work, household production, leisure, and biological maintenance. Human time and capital stocks are used within households to produce a variety of tangible and intangible outputs, and these outputs in turn are used to produce a variety of satisfactions (utilities) or to augment stocks of capital, or both. The basic sources of well-being in the system are ultimately of two types: well-being is produced as a consequence of the intrinsic benefits from all activities engaged in by individuals, which is to say that people have preferences over the way they spend their time; secondly, people derive utilities from the existence of various stocks or states of society, and these satisfactions are independent of the way in which time is used. The satisfactions associated with flows of goods are subsumed by satisfactions derived from activities associated with those goods. The system contains a set of linkages among the various parts: inputs of goods and time are used to produce tangible household output, using the familiar notions of household production functions and constrained optimization; tangible household products, which are intermediate in the system, are used in conjunction with human time to produce direct satisfactions or to augment household capital stocks; both household (micro) and societal (macro) capital stocks are linked directly to psychological well-being; household activities are linked directly to flows of satisfactions, termed process benefits in the system; household preferences and values relating to policy variables are linked to public policies of various sorts, and policies modify the constraints and opportunities relevant for household decisions. The system also has dynamic linkages. Modifications of household or public stocks produce impacts on future flows of well-being; satisfactions from activities may adapt to the existence of constraints, hence changes in constraints can modify preferences and subsequently modify activities; and household behavior has a life-cycle dimension which is inherently dynamic.     

The Political Economy of the Global Environment

Issues of the ‘global commons’ have secured a prominent place in environmental discourse. The temperature-regulating functions of the global atmosphere and radiation control functions of stratospheric ozone offer clear examples of true public goods. Other environmental assets, such as biodiversity and forests, are treated as if they are public goods, but in reality are complex mixtures of private goods, local public goods and global public goods. The approach to the provision and protection of these goods has tended to focus on the development of international agreements, such as those at the Rio de Janeiro ‘Earth Summit’ in 1992. But do these agreements contain the relevant incentives to conserve the global commons? Much depends on one's view of human nature. The Scottish economic tradition suggests that unless incentives focus on ‘self love’, as postulated by Hume and Smith, improvements will, at best, be marginal. A richer array of policy measures is obtained by analysing the potential for ‘global bargains’, trades that improve the environment whilst making each party better off. The souls of Hume and Smith surely approve recent developments in practical global bargains.     

Heterogeneous preferences and in-kind redistribution: Theory and evidence

This paper examines the impact of social heterogeneity on in-kind redistribution. We contribute to the previous literature in two ways: we consider (i) the provision of several public goods and (ii) agents different not only in income, but also in their preferences over the various goods provided by the public sector. In this setting, both the distribution and size of goods provision depend on the heterogeneity of preferences. Our main result is that preference heterogeneity tends to decrease in-kind redistribution, while income inequality tends to increase it. An empirical investigation based on United States Census Bureau data confirms these theoretical findings.