Valuing Public Goods: The Life Satisfaction Approach

By Bruno S. Frey, Simon Luechinger, Alois Stutzer. Social Science Research Network, 2004

195 citations recorded by the source corpus.

This paper discusses a novel approach to elicit people?s preferences for public goods, namely the life satisfaction approach. Reported subjective well-being data are used to directly evaluate utility consequences of public goods. The strengths of this approach are compared to traditional approaches and identification issues are addressed. Moreover, it is applied to estimate utility losses caused by terrorist activities in France, the UK and the Republic of Ireland. Terrorism in these countries depresses life satisfaction in a sizeable and robust way. However, the calculation of the trade-off between terrorism and income requires improved measurement of the marginal utility of income.

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Citations in the corpus

Growth Consequences of Terrorism in Western Europe (2008, background): “Innovative work by Frey, Luechinger, and Stutzer (2004), based on a life-satisfaction approach, shows that self-reported losses of individuals from terrorism can be far greater than these economic consequences in terrorism-ridden countries.”
On the Use of Subjective Well-Being Data for Environmental Valuation (2010, background): “implicitly deduced without respondents being aware that their responses will be used to that end ( Frey et al., 2004; Welsch, 2002, 2006).”
Using Happiness Data for Environmental Valuation: Issues and Applications (2009, unknown): “Outside the environmental realm, there are valuation studies of terrorism (Frey et al., 2004), civil war (Welsch, 2008a) and corruption (Welsch, 2008b).”
The Effect of Income on General Life Satisfaction and Dissatisfaction (2009, background): “Frey et al. (2004) estimate the value of public safety, or the absence of terrorism.”
Life satisfaction and air quality in London (2009, methodology): “This represents a novel method for environmental valuation combining some of the strengths of both revealed and stated preference valuation techniques (Frey et al., 2004; van Praag and Baarsma, 2005; Ferreira et al., 2006), and considered in some depth by van Praag and Ferrer-i-Carbonell (2004).”
Happiness Research: State and Prospects (2005, unknown): “An introduction to the concept of procedural utility is provided by Frey et al. (2004a).”
Design of Stated Preference Surveys: Is There More to Learn from Behavioral Economics? (2010, background): “Hence, it might seem compelling to argue for an increased use of well-being questions in environmental economics, and indeed a number of authors do just that (see e.g., Frey and Stutzer 2002; Frey et al. 2004).”
Calculating Tragedy: Assessing the Costs of Terrorism (2004, unknown): “Frey et al. (2004) calculate a hypothetical willingness-to-pay of a resident of Northern Ireland for a reduction in the number of fatalities to the average level of Great Britain and the Republic of Ireland.”
Approval of equal rights and gender differences in well-being (2010, background): “30This can be understood as procedural disutility (see Frey et al. 2004 for the concept of procedural utility) that affects women’s well-being beyond narrow economic outcomes such as wages.”