Determinants of Insensitivity to Quantity in Valuation of Public Goods: Contribution, Warm Glow, Budget Constraints, Availability, and Prominence

Insensitivity to quantity in valuation appears in 3 ways: embedding (when willingness to pay for a good is smaller if assessed after a superordinate good), insensitivity to numerical quantity, and adding up (when willingness to pay for 2 goods is less than inferred from willingness to pay for each good alone). Results of 11 experiments on these effects are generally inconsistent with 3 accounts: People think of the task as a contribution, they get a warm glow from participation, and they have budget constraints on expenditures for certain goods. The results support an explanation in terms of prominence of the type of good as opposed to its quantity. In addition, 1 study supports availability of only the good evaluated rather than other goods of the same type. These findings support the critics of contingent valuation, but they suggest that some of the methods of decision analysis can improve the elicitation of economic values.