DETERMINANTS OF WILLINGNESS TO PAY FOR BIOSAFETY MEASURES: A CASE STUDY ON COVID-19 PANDEMIC

Abstract

The covid-19 pandemic began in December 2019 in the city of Wuhan and quickly spread across the world, affecting socioeconomic dynamics. In this context, the present study starts from the contingent valuation method to investigate the willingness of individuals to overpay (WTP) for purchases made in commercial establishments (markets and supermarkets) certified with a hypothetical biosafety seal. The empirical analysis considers three exercises: (i) the investigation of the determinants of the probability of the individual accepting to overpay, using the logit model; (ii) the investigation of the determinants of the value of the WTP declared by the individuals who agreed to overpay, carried out using the tobit model and (iii) the estimation of the representative value of the WTP, using the Krinsky-Robb method on the estimates of a logit model. The results suggest that the variables that influence the decision to accept or refuse to overpay may be different from the variables that affect the amount that individuals are willing to overpay. The decision to accept or refuse to overpay, for example, is sensitive to the interviewee’s personal income, whereas the declared value of WTP can be explained by the family’s monthly expenses on necessities.