A platform for research: civil engineering, architecture and urbanism
A platform for research: civil engineering, architecture and urbanism
Abstract A useful distinction is usually made between pecuniary and physical, or technological, externalities. However, in practice and contrary to common prescriptions, pecuniary impacts are often exaggerated and given more than their due, while real social costs of technological effects are systematically discounted. One reason for the difference in the treatment of the two types of externalities is the asymmetry of interests and incentives of contending parties. Small groups representing specific interests are often able to impose costs on larger groups, where the costs are diffused among greater numbers. A second factor that seems to contribute to the departure from the intended treatment of welfare gains and losses is the disregard for the possibility that basing assessments on willingness to pay measures, instead of on the more appropriate compensation demanded measures, will seriously understate losses. Ignoring consistent evidence that indicates a large disparity between these measures may result in a serious bias in allocations.
Abstract A useful distinction is usually made between pecuniary and physical, or technological, externalities. However, in practice and contrary to common prescriptions, pecuniary impacts are often exaggerated and given more than their due, while real social costs of technological effects are systematically discounted. One reason for the difference in the treatment of the two types of externalities is the asymmetry of interests and incentives of contending parties. Small groups representing specific interests are often able to impose costs on larger groups, where the costs are diffused among greater numbers. A second factor that seems to contribute to the departure from the intended treatment of welfare gains and losses is the disregard for the possibility that basing assessments on willingness to pay measures, instead of on the more appropriate compensation demanded measures, will seriously understate losses. Ignoring consistent evidence that indicates a large disparity between these measures may result in a serious bias in allocations.
Values, biases and entitlements
Knetsch, Jack L. (author)
1985
Article (Journal)
English
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