Stated preference evaluation of government budgets

Abstract

Stated preference approaches are widely used in non-market valuation. However, their potential uses extend far beyond valuation. In particular they can be used to assess efficiency of resource allocations and to design optimal resource allocations. Changes to the government budget were evaluated using a choice experiment. Results indicate potential efficiency gains from reallocation of the budget to items with higher marginal utility. In particular, New Zealand residents want more spending on health, education and the environment, with health spending consistently having the highest marginal benefits. People want less government money spent on income support. The choice experiment was able to identify the impacts of demographic factors. Young people rated spending on the environment and education more highly than other respondents.