A mechanism to derive more truthful willingness to accept values for renewable energy systems.

This paper examines and compares households' willingness to accept (WTA)/willingness to pay (WTP) ratio for solar power equipment on their premises through both a novel experimental approach and conventional techniques. The experimental approach was administered by using a Becker-DeGroot-Marschak method and cheap talk, with open-ended questions of WTA/WTP. The results were quite striking. The ratio for the incentivised approach was 1.08:1; whereas for the conventional approach it was 3.5:1. The findings suggest that the hypothesis that WTP equals WTA cannot be rejected for the incentivised mechanism, and it appears to control for the individual's strategic behaviour bias as a treatment against over-estimating WTA and under-estimating WTP. The findings also provide some policy implications for Northern Cyprus: the government can set lower financial incentives to increase the solar power installed capacity on the island.

Comparing Increments in Utility of Health: An Individual-based Approach.

BACKGROUND: Many economic evaluations of health care changes rely on quality-adjusted life year (QALY) estimates. Notably, though, the QALY approach values health states rather than changes in health states. Hence, a gain in utility of health is only indirectly valued through an ex ante preference elicitation of health states and the subsequent subtraction of health state values from one another, rather than being valued directly. There is therefore an underlying assumption that individuals, from an ex ante perspective ceteris paribus, would be indifferent between equal utility increments from health states with different baseline utilities. OBJECTIVE: The aim of this paper is to develop a method that would allow us to measure individual-based preferences over utility increments from different baselines. We elicit our data using face-to-face interviews on a sample of UK individuals. RESULTS: Overall, we find that gains of "equal" utility increments from different baselines are not found to be equally preferable by the individual. CONCLUSIONS: The results indicate that the subtraction approach could lead to sub-optimal resource allocations and suggest that a new approach which values health changes directly would better reflect individual preferences. This paper provides the foundations for a method to achieve this.

Searchers vs surveyors in estimating the monetary value of a QALY: resolving a nasty dilemma for NICE.

Recently, for many health economics researchers, empirical estimation of the monetary valuation of a quality-adjusted life year (QALY) has become an important endeavour. Different philosophical and practical approaches to this have emerged. On the one hand, there is a view that, with health-care budgets set centrally, decision-making bodies within the system can iterate, from observation of a series of previous decisions, towards the value of a QALY, thus searching for such a value. Alternatively, and more consistent with the approach taken in other public sectors, individual members of the public are surveyed with the aim of directly eliciting a preference-based - also known as a willingness-to-pay-based (WTP-based) - value of a QALY. While the former is based on supply-side factors and the latter on demand, both in fact suffer from informational deficiencies. Sole reliance on either would necessitate an acceptance or accommodation of chronic inefficiencies in health-care resource allocation. On the basis of this observation, this paper makes the case that in order to approach optimal decision making in health-care provision, a framework incorporating and thus, to a degree, reconciling these two approaches is to be preferred.