Declared Preference Method—Research Experiment Concerning Air Quality

  • Małgorzata Burchard-DziubińskaEmail author
  • Elżbieta Antczak
  • Agnieszka Rzeńca
Conference paper
Part of the Springer Proceedings in Business and Economics book series (SPBE)


Externalities take place when an economic operator does not experience all costs (in case of negative externalities) or benefits (in case of positive externalities) involved in his activities, which are passed on to other economic operators. Specific challenge to economists is posed by negative technological externalities, which have also triggered experimental research studies using the declared (stated) preference method. The aim of the experiment was to find the most preferred solution geared towards the elimination of the source of air pollution in a village and to learn about respondents’ willingness to pay (WTP) for the public good supplied as a result of such elimination. Out of the five proposed options, one of the most preferred by respondents was a voluntary fundraising initiative to collect money for the construction of the neighbour’s connection that would go on until they collect PLN 10 k but not longer than for a year. By using the WTP method, we arrived at an unambiguous valuation of the good expressed in terms of money. The most preferred tax rate revealed as a result of the survey suggests that the valuation of the public good was underestimated. As a result, the situation described in the case study cannot be resolved successfully.


Public goods Externalities Declared preference method Air pollution 


  1. 1.
    Baker, R., Ruting, B.: Environmental policy analysis: a guide to non-market valuation. In: Productivity Commission Staff Working Paper, Canberra. Available via Media and Publications. Accessed 04 Apr 2019 (2014)
  2. 2.
    Bowen, H.R.: The interpretation of voting in the allocation of economic resources. Q. J. Econ. 58, 27–48 (1943). Accessed 04 Jan 2019CrossRefGoogle Scholar
  3. 3.
    Brouwer, R.: Constructed preference stability: a test–retest. J. Environ. Econ. Policy 1, 70–84 (2012). Accessed 04 Jan 2019CrossRefGoogle Scholar
  4. 4.
    Brown, C.V., Jackson, P.M.: Public Sector Economics. Blackwell, London (1992)Google Scholar
  5. 5.
    Brown, T.C.: Introduction to stated preference methods. In: Champ, P.A., Boyle, K.J., Brown, T.C. (eds.) A Primer on Nonmarket Valuation. The Economics of Non-market Goods and Resources, vol. 3, pp. 99–110. Springer, Dordrecht (2003)CrossRefGoogle Scholar
  6. 6.
    Buchanan, J.: The demand and supply of public goods. In: Buchanan, J.M. (ed.) The Collected Work, vol. 5, p. 32. Liberty Fund, Indianapolis (1999)Google Scholar
  7. 7.
    Cochran, W.G.: The chi-square goodness-of-fit test. Ann. Math. Stat. 23(3), 315–345 (1952)CrossRefGoogle Scholar
  8. 8.
    Desmarais-Tremblay, M.: On the Definition of Public Goods. Assessing Richard A. Musgrave’s contribution. Documents available via. de travail du Centre d’Economie de la Sorbonne. Accessed 04 Apr 2019 (2014)
  9. 9.
    Fisher, R.A.: Statistical Methods for Research Workers. Oliver and Boyd, Edinburgh (1934)Google Scholar
  10. 10.
    Hanemann, W.M.: Valuing the environment through contingent valuation. J. Econ. Perspect. 8(4), 19–43 (1994)CrossRefGoogle Scholar
  11. 11.
    Loomis, J., Brown, T., Lucero, B., Peterson, G.: Improving validity experiments of contingent valuation methods: results of efforts to reduce the disparity of hypothetical and actual willingness to pay. Land Econ. 72(4), 450–461 (1996)CrossRefGoogle Scholar
  12. 12.
    Maddala, G.S.: Introduction to Econometrics. Macmillan, New York (1992)Google Scholar
  13. 13.
    Musgrave, R.A.: A multiple theory of budget determination. Finanzarchiv 17(3), 333–343 (1957)Google Scholar
  14. 14.
    Roberts, D.J.: The Lindahl solution for economies with public goods. J. Public Econ. 3(1), 23–42 (1974)CrossRefGoogle Scholar
  15. 15.
    Samuelson, P.A.: Diagrammatic exposition of a theory of public expenditure. Rev. Econ. Stat. 37(4), 350–356 (1955)CrossRefGoogle Scholar
  16. 16.
    Żylicz, T.: Ekonomia środowiska i zasobów naturalnych (Economics of the environment and natural resources) [in Polish]. PWE, Warszawa (2004)Google Scholar

Copyright information

© Springer Nature Switzerland AG 2020

Authors and Affiliations

  • Małgorzata Burchard-Dziubińska
    • 1
    Email author
  • Elżbieta Antczak
    • 1
  • Agnieszka Rzeńca
    • 1
  1. 1.Faculty of Economics and SociologyUniversity of LodzLodzPoland

Personalised recommendations