Preferences Behind a Veil of Ignorance – Center for Health Decision Science

In conventional benefit-cost analysis, values are based on individuals’ willingness to exchange their own income for the outcomes they experience. Susan Chilton presented an alternative approach that takes into account concern for others’ well-being in a recent CHDS seminar, placing the respondent behind a veil of ignorance. Chilton is a Professor of Economics at Newcastle University in England.

Traditional willingness-to-pay (WTP) estimates are meant to capture the maximum price an individual would pay for a product or service based on personal gain. However, WTP estimates for socially beneficial programs have been shown to be influenced by concern for others, potentially biasing values such that once aggregated, they would no longer consistently identify programs that lead to net improvements in welfare. Chilton and co-authors developed a new citizen-based approach. They alter traditional WTP elicitation methods by asking individuals to place themselves behind a veil of ignorance, in which their place in society is unknown. Theoretically, this framing should allow for incorporation of socially motivated considerations, including altruistic preferences and concern for the distribution of outcomes across individuals.

The authors empirically tested this approach using a lab experiment and a field survey. They found that implementing this approach is feasible and reduces the bias in WTP estimates, improving their alignment with the goals of benefit-cost analysis.

Chilton’s co-authors include Morgan Beeson (Newcastle University), Emily Lancsar (Australian National University), and Jytte Seested Nielsen (Newcastle University).

Learn more: Read the article, Citizen Preferences and BCA: A Model of Willingness-to-Pay Behind a Veil of Ignorance