willingness to pay
- The largest amount of money that an individual or group could pay, along with a change in policy, without being made worse off. It is therefore a monetary measure of the benefit to them of the policy change. If negative, it measures its cost.
- (written as Willingness to Pay)The maximum sum an individual (or a government) is willing to pay to acquire some good or service, or the maximum sum an individual (or government) is willing to pay to avoid a prospective loss. It is usually elicited from stated or revealed preference experiments. In normative analyses based on user preferences, one should never forget that willingness to pay is highly conditioned by ability to pay. Measures of willingness to accept typically reveal higher values than measures of willingness to pay.