Measuring Benefits for Air Quality from Survey Data

Abstract

The purpose of this paper is to discuss how to model benefits for changes in air quality based on economic theory. Two different willingness to pay responses are studied - willingness to pay to avoid loss of air quality and willingness to pay to obtain improvements in air quality. Observations of willingness to pay were obtained from a survey; survey results were used to develop and compare models for these two types of responses. Differences in the estimated response functions indicate that preferences regarding gains and losses may be generated by different preference models, i.e. obtaining gains may be a “luxury” whereas avoiding losses may be a “necessity.