Joint Production and Averting Expenditure Measures of Willingness to Pay: Do Water Expenditures Really Measure Avoidance Costs?

Posted: 18 Oct 2000

See all articles by Nii Adote Abrahams

Nii Adote Abrahams

Missouri State University

Bryan J. Hubbell

U.S. EPA

Jeffrey L. Jordan

University of Georgia - Department of Agricultural & Applied Economics

Multiple version iconThere are 2 versions of this paper

Abstract

A multinomial selection model of averting behavior in response to water contamination risks is estimated for Georgia residents. Measures of non-health related water quality (taste, odor, and appearance) are incorporated into the model to account for joint production of utility and health. The model examines the choice between bottled, filtered tap, and unfiltered tap water. Results of the estimation indicated that perceived risk from tap water, concern about water quality (taste, odor, and appearance of tap water), race, and age are the most important determinants of bottled water selection. Information regarding current or prior problems with tap water, perceived risk from tap water, and income are the most important determinants of water filter selection. Adjusting for quality differences between tap and bottled water, we show that averting costs estimates using bottled water expenditures would lead to an overstatement of avoidance costs by about 12%.

JEL Classification: Q25

Suggested Citation

Abrahams, Nii Adote and Hubbell, Bryan J. and Jordan, Jeffrey L., Joint Production and Averting Expenditure Measures of Willingness to Pay: Do Water Expenditures Really Measure Avoidance Costs?. Available at SSRN: https://ssrn.com/abstract=231486

Nii Adote Abrahams

Missouri State University ( email )

3950 E Newman Rd
Joplin, MO 64801-1595
United States

Bryan J. Hubbell (Contact Author)

U.S. EPA ( email )

MD504-02
RTP, NC 27711
United States
919-541-0621 (Phone)
919-541-0839 (Fax)

Jeffrey L. Jordan

University of Georgia - Department of Agricultural & Applied Economics

Athens, GA 30602-7509
United States

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