۱- Introduction

۲- Theoretical background

۳- Empirical application

۴- Discussion

۵- Conclusion

References

Abstract

Neoclassical valuation methods often measure the contribution that non-market goods make to utility as income compensations. This circumvents Arrow’s impossibility (AI) –a theoretical proof establishing the impossibility of social preferences – but those methods cannot be used in all settings. We build on Arrow’s original proof, showing that with two additional axioms that allow for social learning, a second round of preference elicitation with a social announcement after the first, generates logically consistent social preferences. In short: deliberation leads to convergence. A ‘web-game’ aligning with this is trialed to select real world projects, in a deliberative way, with the board of an Australian Aboriginal Corporation. Analysis of the data collected in the trial validates our theory; our test for convergence is statistically significant at the 1% level. Our results also suggest complex social goods are relatively undervalued without deliberation. Most non-market valuation methods could be easily adapted to facilitate social learning.

Introduction

The Millennium Ecosystem Assessment emphasized the importance of properly measuring the impact of social decisions on ecosystems given their importance to human wellbeing (Bullock et al., 2018). That this notion has been widely accepted is evidenced by the rapid growth in studies that seek to do that – often using neoclassical non-market valuation methods to generate estimates and with large organizations supporting the endeavor (see, for example, The Economics of Ecosystems and Biodiversity (Braat and De Groot, 2012)). Neoclassical methods have done much to highlight the importance of numerous non-market goods and services, including various ecosystem services, but cannot measure the value of all goods and services (Cook et al., 2017). They are adept at measuring the value (in terms of income compensation) of simple individual goods – herein denoted as SIG and defined as a good that generates a simple/singular benefit (e.g. more income or more food) which accrues to an individual, but struggle to adequately measure relational values (Chan et al., 2016), with some arguing that neoclassical methods are, by definition, incommensurable with them (Kallis et al., 2013; Oberheim and Hoyningen-Huene, 2009).1 Neoclassical methods are not yet adept at measuring the value of complex social goods (Stoeckl et al., 2018) – herein denoted CSG and defined as goods that generate a diverse range of benefits2 that accrue to a diverse range of people at multiple social scales (e.g. to individuals, families, communities and/or society more broadly). This is because neoclassical methods are essentially partial equilibrium in nature – specifically designed to assess the value of singular/simple goods that generate benefits for individuals, whilst assuming all else is constant (and that individual preferences/utility functions, are independent). The social valuation of ecosystem services (particularly those that are essentially CSGs), which allows one to deduce social preference, thus remains an open problem for contemporary ecological economics (Kenter et al., 2015; Kenter et al., 2016).