Chapter 9: Accounting for WTP/WTA Discrepancy in Discrete Choice Models: Discussion of Policy Implications Based on Two Freight Transport Stated Choice Experiments

A key input in cost-benefit analysis (CBA) is represented by the marginal rate of substitution which expresses the willingness to pay (WTP), or its counterpart willingness to accept (WTA), for both market and non-market goods. The consistent discrepancy between these two measures observed in the literature suggests the need to estimate reference dependent models able to capture loss aversion by distinguishing the value attached to a gain from the value attached to a loss according to reference dependent theory. This chapter proposes a comparison of WTP and WTA measures estimated from models with both symmetric and reference dependent utility specifications within two different freight transport stated choice experiments. The results show that the reference dependent (or asymmetric) specification outperforms the symmetric specification and they prove the robustness of reference dependent specification over datasets designed according to different ranges of attribute levels ranges. Moreover the study demonstrates the policy relevance of asymmetric specifications illustrating the strong implications for CBA in two case studies.