Gain and Loss Domains and the Choice of Welfare Measure of Positive and Negative Changes
-
Jack L. Knetsch
Abstract
Mounting evidence continues to suggest that people value changes in terms of a neutral reference state and that those in the domain of losses are commonly valued far more than those in the gains. Consequently, both negative and positive changes in the domain of losses, including mitigation of losses such as restoring environmental quality and reducing accident rates, may be more accurately valued with the minimum acceptable-compensation (WTA) measure, those in the domain of gains are more accurate with the maximum willingness-to-pay (WTP) measure. Current practice, that assumes equivalence and that all positive changes are considered as gains, is therefore likely to often seriously mislead.
©2012 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
Articles in the same Issue
- Article
- Gain and Loss Domains and the Choice of Welfare Measure of Positive and Negative Changes
- Economic Costs and Benefits of Promoting Healthy Takeaway Meals at Workplace Canteens
- Implications of a Weaker Form of Complementarity
- News and Social Cost: The Case of Oil Spills and Distant Viewers
- The Costs and Benefits of Intensive Forest Management
Articles in the same Issue
- Article
- Gain and Loss Domains and the Choice of Welfare Measure of Positive and Negative Changes
- Economic Costs and Benefits of Promoting Healthy Takeaway Meals at Workplace Canteens
- Implications of a Weaker Form of Complementarity
- News and Social Cost: The Case of Oil Spills and Distant Viewers
- The Costs and Benefits of Intensive Forest Management
