Erik Kempe Award 2002: Karin Nyborg

Karine Nyborg was the winner of the 2002 Erik Kempe Award, for her article:
“Homo Economicus and Homo Politicus: Interpretation and Aggregation of Environmental Values”
published in the Journal of Economic Behavior and Organization 42, 305-322, 2000.

The Nomination Committee, composed by Thomas Aronsson, Scott Barrett, and Michael Rauscher, has awarded this paper for the following motivation:
This paper concerns the interpretation and aggregation of environmental values, and is related to the contingent valuation literature. It is based on the idea that an individual may have two distinct preference orderings; one in which he/she behaves as a consumer and the other in which he/she takes the role as a “citizen”. In the former situation, the individual tries to pursue individual goals, and the preferences are represented by a traditional utility function defined over private and public goods. As a citizen, on the other hand, the individual is concerned with the public interest, and the preferences are represented by a subjective social welfare function, which also contains a subjective judgment of the well being of others. Depending on the nature of the willingness to pay questions, and how the individuals perceive them, they may respond either as consumers or citizens. As such, the analysis provides an explanation to several puzzling results in the contingent valuation literature. It also shows that, unless it is understood whether individuals respond to willingness to pay questions in their role of consumers or in their role of citizens, the resulting aggregate measures of willingness to pay may be difficult to interpret.Katrin Nyborg receives the Erik Kempe Award for her formalization of the idea that individuals may have two, possibly conflicting, preference orderings, and for analyzing the implications of the contingent valuation method.
The contingent valuation method is one of the most frequently applied techniques to value goods and services provided by the environment. It is, therefore, important that this method is well understood. The paper does not only contribute to the literature by giving a formal explanation to results in previous applications. It also contributes by suggesting means of how to test whether individuals respond as consumers or citizens, and by pointing out directions useful in future research.