Why Being a Frequent Flyer and an Environmental Activist is no Contradiction : The Willingness to Pay for Public Goods and its Components

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Gogoll, Niklas ; Schlieszus, Felix:
Why Being a Frequent Flyer and an Environmental Activist is no Contradiction : The Willingness to Pay for Public Goods and its Components.
Bayreuth , 2021

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Abstract

This article examines the willingness to pay for public goods. Motivated by the question whether it is hypocritical to call for a better environment and act - at first glance - contradictory by polluting the environment for instance by flying frequently, we develop a theoretical model to explain the underlying utility optimization problem. Flying frequently - even though an individual has a high preference for the environment - can be explained by the marginality of this individual's impact on the public good which gives an incentive to free ride. However, it is possible that individuals show behaviour which supposedly improves the environment although being aware that their impact is negligibly small. We argue that these actions are not based on the preference for the public good itself but are to fulfill social incentives e.g. silence one's conscience or avoid negative reputation. The only way to impact the environment is therefore to force reciprocal behaviour which can be achieved by governmental intervention. By introducing a theoretical construct, the Quasi-Monarch, we are able to include both kinds of willingness to pay in our model -- for the public good itself and for fulfilling one's social incentives.