The Price of Virtue
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The Price of Virtue

The Economic Value of the Charitable Sector

Vivien Foster, Susana Mourato, David Pearce and Ece Özdemiroglu

The authors of this pioneering book attempt to address this problem by utilizing survey techniques, originally developed in environmental economics, to place an economic value on the benefits provided by the voluntary sector in the UK.
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Chapter 10: Conclusions and Policy Implications

Vivien Foster, Susana Mourato, David Pearce and Ece Özdemiroglu


10.1 THE SIZE OF THE CHARITABLE SECTOR Part I of this volume was dedicated to measuring the size of the voluntary sector. While most studies have determined size by the measurement of income and expenditure by designated charities or the amount of employment associated with them, our own approach departs substantially from those studies by seeking the willingness to pay (WTP) for charitable services. The relevant WTP is that of the general public and the users, or beneficiaries, of the charities. To this end, we conducted extensive questionnaires with the general public, using stated preference procedures, and with one group of beneficiaries, the homeless. Our approach has the following advantages. First, as demonstrated in Chapter 1, it is rooted in the theory of welfare economics. Second, it enables us to lay the foundations for an approach to determining the efficiency of different forms of social provision. Third, it highlights the potential revenues that, in theory, charities could capture but which currently they do not, that is, the excess of WTP over actual donations. Fourth, it offers far more scope for a beneficiary-oriented approach to social provision. We argue that our approach provides a more accurate measure of the size of the voluntary sector. Rather than focusing on income and expenditure, which are, effectively, measures of the cost of the sector, WTP gives some idea of the benefits of the sector to society at large. Our calculations for the UK suggest that the social value of...

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