Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/192224 
Year of Publication: 
1998
Series/Report no.: 
Discussion Papers No. 241
Publisher: 
Statistics Norway, Research Department, Oslo
Abstract: 
In most applied cost-benefit analyses, individual willingness to pay is aggregated without using explicit welfare weights. This can be justified by postulating a utilitarian social welfare function, along with the assumption of equal marginal utility of income for all individuals. However, since marginal utility is a cardinal concept, there is no generally accepted way to verify the plausibility of this latter assumption, nor its empirical importance. In this paper we use data from seven contingent valuation studies to illustrate that if one instead assumes equal marginal utility of the public good for all individuals, aggregate monetary benefit estimates change dramatically.
Subjects: 
Utility comparisons
environmental valuation
cost-benefit analysis
choice of numeraire
JEL: 
D61
D62
D63
H41
Q2
Document Type: 
Working Paper

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