Browse by author
Lookup NU author(s): Dr Morgan Beeson, Professor Susan Chilton, Dr Hugh Metcalf, Professor Jytte Seested NielsenORCiD
This work is licensed under a Creative Commons Attribution 4.0 International License (CC BY 4.0).
Public sector allocative decisions should reflect, as far as possible, the preferences of those affected bythe decisions. Conventional benefit–cost analysis (BCA) will simply aggregate individuals’ privatewillingness-to-pay (WTP) over all affected individuals to estimate the total benefits of a policy thatdelivers a public good. Given the nature of a public good, it is not unreasonable to consider that anindividual may have altruistic preferences over the consumption of the public good by others. In thispaper, we set out the theoretical underpinnings for a new citizen-based WTP, informed by politicalphilosophy. Our model extends the standard social utility model (Bergstrom, 2006) of WTP for apublic good when individuals are altruists by incorporating a Veil of Ignorance (VoI; Harsanyi, 1955).Our findings show that our WTP (Citizen) correctly includes altruistic as well as distributionalpreferences of individuals in society into WTP for use in a BCA. When WTP (Citizen) are aggregatedfor use in a BCA, equal weight is given to each individual’s preference and the BCA will correctlyidentify potentially Pareto-improving projects in a consistent manner.
Author(s): Beeson M, Chilton S, Metcalf H, Nielsen JS
Publication type: Article
Publication status: Published
Journal: Journal of Benefit-Cost Analysis
Year: 2025
Volume: 15
Issue: S1
Pages: 183-205
Online publication date: 13/01/2025
Acceptance date: 20/09/2024
Date deposited: 15/01/2025
ISSN (electronic): 2152-2812
Publisher: Cambridge University Press
URL: https://doi.org/10.1017/bca.2024.42
DOI: 10.1017/bca.2024.42
Altmetrics provided by Altmetric
