Introduction and Context
The article in question deals with people’s willingness to pay for better air quality in Sweden. The purpose of the study is to evaluate “individual” willingness to pay for improved air in the areas where the participants of the study lived and worked as well as more distant areas (Carlsson and Johansson-Stenman 661). The researchers focus on Swedish areas, urban and rural. The study focuses on such environmental issues as air pollution or rather people’s perspectives concerning the matter.
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The participants share their views on the quality of air and their readiness to pay for improved air. The researchers hypothesize that the participants’ willingness to pay will be mainly determined by health concerns and will be associated with the areas they live in. The authors also try to evaluate the effectiveness of some tools used within the scope of the econometric analysis.
Methods and Data
The researchers employ the Contingent Valuation Method to examine people’s willingness to pay for better air. The study in question is a part of another research, which has certain effects on the data available. The authors use the data obtained during the Household Market and Nonmarket Activities survey carried out in 1996 (Carlsson and Johansson-Stenman 662). As for the participants, 3240 people (living in 1922 households) took part in the study.
The researchers stress that the choice of the research method was determined by the larger study. They note that the use of surveys with open-ended questions is not typical and is often questioned by researchers, but this type of methodology also has its benefits as the answers include sufficient data. It is also emphasized that open-ended questions enable researchers to avoid “yea-saying bias” (Carlsson and Johansson-Stenman 662).
The researchers use descriptive statistics to analyze the data collected. The independent variables of this study fall into such groups as demographic and socio-economic variables, attitude and awareness variables, and, finally, health variables. The dependent variable is the participants’ willingness to pay. The researchers use such tools as the one- and two-equation censored models, Heck it estimation, and Probit model.
Results and Discussion
It is necessary to note that the study’s results are quite expected. The participants’ willingness to pay is higher in individuals with higher income and wealth. Those having higher education are also more willing to pay for the better quality of air. People associated with environmental organizations and people living in big cities are also more willing to pay. These data are consistent with the information reported by other researchers (Carlsson and Johansson-Stenman 668).
Interestingly, willingness to pay is higher among men compared to women. At that, the measure is lower among retired people. The researchers stress that the rate of people living in big cities (which means very polluted areas) and willing to pay for improved air is considerably lower than expected. The authors claim that these results show that CV surveys can be regarded as a reflection of the “purchase of moral satisfaction” (qtd. in Carlsson and Johansson-Stenman 668).
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It is also emphasized that the econometric analysis provides quite expected results as certain groups of people (those with higher income, educational background, big cities residents, and so on) are more willing to pay for the improved air quality.
Nonetheless, the researchers add that the reasons underlying these trends are yet to be considered. The focus on health is not prevailing. People are also concerned with the environment as they note that they are willing to pay due to their concerns about nature. It is necessary to note that the researchers do not evaluate the costs of benefits of a policy or strategy but estimate people’s willingness to pay for certain improvements in the environment. The authors also note that the use of the Tobit 2 model (independent specification model) is more effective compared to the use of the conventional Tobit 1 model.
Conclusions and Criticisms
The authors do not mention any particular policy, but they note that the valuation of people’s willingness to pay is important for policymakers involved in the process of the allocation of funds. The researchers note that the measurement tools they used can help researchers and practitioners estimate people’s readiness to invest in the areas they live in. Apart from that, the research in question can be beneficial in other areas as well.
For example, the data concerning the importance of people’s awareness should be used by the government and non-governmental organizations. People should be aware of the costs and benefits of programs, projects, and policies aimed at improving the environment. The increase in people’s awareness will also positively correlate with their readiness to invest in the environment, which can be beneficial for communities. Finally, policymakers should pay attention to the reasons behind people’s willingness to pay. There is a definite shift from the focus on health to concerns about nature. This information should be used when encouraging people to participate in various environmental incentives or discussing (and introducing) certain taxes.
The study under analysis has certain strengths and limitations. It provides insights into the reasons behind people’s willingness to pay for better air quality. However, the data can be regarded as somewhat far-fetched since the authors assume that those who are willing to pay in the area they live in are more concerned about their health while those ready to pay for improvements in distant locations also have certain environmental concerns.
To improve this study, it is necessary to implement another study. It is necessary to use surveys where people will answer explicit and implicit questions concerning their readiness to pay and reasons for this willingness to invest in better air quality. For instance, the participants will have to address hypothetical scenarios concerning possible investments in the local area, as well as some distant locations. The participants could also rate the reasons for their choices.
The major variables should be the environment, health, social responsibility, and so on. Of course, it can be beneficial for each country to implement such surveys to obtain insights into people’s willingness to invest in the improvement of the environment.
In conclusion, it is possible to note that the article is a relevant source of information concerning environmental issues. It can also be regarded as a starting point for further research associated with people’s willingness to pay for the improved environment, as well as people’s views on environmental issues and the role of the community. It is necessary to carry out similar studies (with the use of measurements employed in this study) to analyze recent data.
Carlsson, Fredrik, and Olof Johansson-Stenman. “Willingness to Pay for Improved Air Quality in Sweden.” Applied Economics 32.6 (2000): 661-669. Print.