What is Willingness To Pay?

An explanation of the concept in philosophy of economics known as Willingness to Pay and the philosophical implications of it.

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Information for this video gathered from The Stanford Encyclopedia of Philosophy, The Internet Encyclopedia of Philosophy, The Cambridge Dictionary of Philosophy, The Oxford Dictionary of Philosophy, The Oxford Companion to Philosophy, The Routledge Encyclopedia of Philosophy, The Collier-MacMillan Encyclopedia of Philosophy, the Dictionary of Continental Philosophy, and more!

[InventiveHarvest]

Mmmmm.... Donut!

Some comments:

Ability to pay is not necessarily limited by the amount of money in the wallet as the person could borrow from the future to pay for the water.

There is danger in overvaluing benefit for the less affluent, because it would create perverse incentives.

An interesting phenomenon is that willingness to pay does not equal willingness to accept; although theory tells us that these should be equal. However, in life we often see examples of this discrepancy.

Only had a brief chance to look at the book. It is nice and thick. It seems to be very well written. Hopefully I will be able to dive into it this weekend.

[Galkatokk]

We must use willingness to pay because it's the only way to take into account the uncountable factors that led to the final cost of the commodity. This allows potential producers of the commodity to selfishly determine the incentive they have to produce said commodity for their own benefit, thereby increasing total supply of the commodity. Over time, competition in the market by self-interested actors brings down the cost of producing this commodity, increasing access for the poor. See: Cell phones.

If a potential producer of the commodity couldn't get an accurate, absolute reflection of his potential market's willingness to pay, he could not balance his incentive against the cost to him for producing the commodity, and would be much less likely to enter that market as a producer, thereby reducing the total available amount of that product, resulting in the last-donut-in-the-shop scenario.

[prenuptials]

Did you make the "WTP" on the thumbnail as a subtle reference to Teyana Taylor's 2018 hit single WTP (work this poosay)? Very clever!

[Pfhorrest]

The first thought that strikes me upon learning of this just now is that a simple possible way to remedy the problem with willingness to pay being constrained by ability to pay is to calculate benefit not in absolute currency but in marginal utility of currency. To a person who has only $1, $1 is worth much more than $100 is worth to a millionaire, because each additional dollar is worth less in actual utility than the last. So the millionaire may be willing to pay $100 because he easily can and just doesn't care about a measly $100, but that very fact that he doesn't care means that he's actually spending less in terms of his own utility than the person who is spending their very last precious dollar.

[MrGustavier]

3:44 _"it seems to make intuitive sense that you get some benefit for getting something for less than you paid for it"_

I don't know if it's intuitive or not, because I don't even understand the sentence. I think maybe there's a mistake ? Shouldn't the correct sentence be : "it seems to make intuitive sense that you get some benefit for getting something for less than you *were willing to pay* for it" ?

[arallskiant]

I did not expect this kind of theme here, I am pleasantly surprised. Thank you

[johnlynch]

7:47 YO! I AM LOVING THAT ILLO! LOVING IT! BAD ASS

[Dadas]

Most probably it depends how we define benefit. If one reads some basic book on economy 101, one will learn quickly that what's in that book is not what one had thought those terms meant.

[christiangerard]

This is very useful in my environmental science program haha

[dragonsword]

@Carnedes, if I recall correctly from your previous lectures, you are an academic skeptic (in the context of epistemology)- given such radical doubt(s) towards epistemic commitments, I wonder what is your fundamental axiomatic commitment to economics- particularly in the context of game theory/rational choice theory.

As per W2P discourse: pretty sure anyone trained in the theory of action can make better arguments about choices (desire-based or whichever else) than a classically-trained economist or a behavioral economist. Cheers!

[mickeymaples]

hey carneades! I just got your book and reading it now!

[samuelm]

As an economist who does lots of CBAs, the limitations of WTP vales are well known, and critiques like this are a good reminder to use such values with care. One should very seriously consider whether the same bottle of water given to a thirsty yet poor person is even the same good if it is given to the rich person.

I'll be interested to see your book, but I'll be amazed if you can 'fix' CBA :D

[apriljanedinopol]

Who first author formulate willingness to pay?

[RENATVS_IV]

Very good topic. I will wait for more content about this

[KaiHenningsen]

This makes me wonder for examples of where this kind of analysis is used in the public sector because I can't come up with any for the life of me.

[xBogdan]

Will a digital format of the book be offered at some point? I would gladly buy it.

[muhammadshahedkhanshawon]

Great video!i have a question please reply...do you think our universe is a brute fact or it's necessary?and do you accept contingency argument's 1st stage?i.e. contingent facts can be explained by a Necessary existence?

[barneyross]

Hi Carneades ! Can you suggest a book on logic which covers the different types propositional, modal etc. Just started the journey.

[bobann]

Are you familiar with Yuval Noah Harari? If so what are your thoughts on some of his ideas?

[chimpera]

Wouldn't this problem be solved by redefining the willingness to pay to what a person would pay if they had the ability?