Posted prices experiments on decision making and perceived risk: WTA for exposure to contaminated water
Date
2015
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Publisher
University of Delaware
Abstract
We explore how participants perceive certain environmental risks. The design is an economic experiment relying on the implementation of a dichotomous choice format. The inspiration behind this study is to identify subjects’ behaviors towards exposure to contaminated water and whether the inclusion of incentives affects this behavior in any way. Heavy metals such as Arsenic (As) and Lead (Pb) have been recognized as significant pollutants, these contaminants can naturally penetrate a community’s water supply contingent on any area’s location and industrial footprint. The toxic effects of exposure to drinking water contaminated with Arsenic have been documented by various environmental agencies (Levin 1997); (Smith & Steinmaus 2009) and maximum contamination standards have been established accordingly by the Environmental Protection Agency (EPA). Focus for this study is placed on areas throughout New Castle County, Delaware, where the above mentioned contaminants have been recorded in their soil and natural waters (EPA 2014). For the sake of this study, willingness-to-accept (WTA) will be tested across three exposure paths to waters with varying concentrations of Arsenic and Lead. An experiment was conducted at three different locations within New Castle County, Delaware. Participants were asked a series of Yes/No questions on whether they would be willing to expose themselves for a randomly posted price via three different methods that varied by perceived riskiness (hand submersion, vapor inhalation and drinking) to mixtures of water from areas that have once been measured to be contaminated with trace amounts of Arsenic and Lead. Our results suggest that participants are significantly less likely to expose themselves via vapor inhalation and drinking compered to touching the water. The regression results also show that price does not significantly affect participants’ willingness to expose themselves; however, the variance of the concentrations does influence their decision-making.