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Using the Becker-DeGroot-Marschak (BDM) mechanism, we estimate the willingness-to-pay (WTP) for and impact of clean water technology through a field experiment in Ghana. Although WTP is low relative to the cost, demand is relatively inelastic at low prices. In the short-run, treatment effects are positive—the incidence of children’s diarrhea falls by one third—and consistent throughout the WTP distribution. After a year, usage has fallen, particularly for those with relatively low valuations. Strikingly, the long-run average treatment effect is negative for those with valuations below the median. Combining estimated treatment effects with individual willingness-to pay measures implies households’ valuations of health benefits are much smaller than those typically used by policymakers. Finally, we explore differences between BDM and take-it-or-leave-it valuations and make recommendations for effectively implementing BDM in the field.
Suggested citation: Berry, James, Greg Fischer and Raymond P. Guiteras, “Eliciting and Utilizing Willingness-to-Pay: Evidence from Field Trials in Northern Ghana,” CEnREP Working Paper No. 18-016, May 2018, http://go.ncsu.edu/cenrep-wp-18-016. Accepted, Journal of Political Economy.
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Scripts and survey forms for sales treatments: https://dataverse.