Bridging the gap between laboratory experiments and naturally occurring markets: An inferred valuation method

Several recent studies have found important differences between behavior in the laboratory and the field. We explore two possible causes for the divergence: social concerns and unfamiliarity with the traded good. Consistent with our conceptual model, we find that people overstated their preferences for relatively familiar goods with normative attributes and understated their preferences for a relatively unfamiliar good with low normative motivations in the laboratory as compared to the field. We also find that for goods with a normative dimension, a new method we refer to as inferred valuation has the potential to narrow the lab–field gap. In some cases, willingness-to-pay obtained from a conventional valuation elicitation method is more than twice the value from the new inferred valuation approach.     

Parental altruism and the value of avoiding acute illness: are kids worth more than parents?

A model describing parents’ preferences to relieve their own and their children's acute illnesses is estimated using stated-preference data. Estimated marginal rates of substitution (MRS) between child and parent illness are about two, indicating that parents value children's illness attributes twice as highly as their own. The MRS is larger for younger children, falls toward unity as the child approaches adulthood, and appears to reflect parental altruism rather than parent–child differences in initial health or illness costs. Intra-family allocations may compensate for chronic health impairments. Parents’ willingness to pay to avoid own or child illness increases with income, declines with fertility, increases at a decreasing rate with duration and number of symptoms, and depends on perceived discomfort and activity restrictions. Current methods of assessing morbidity benefits of environmental regulations may understate substantially the value of children's health, particularly in African-American families.