Public goods undervalued in welfare analysis, leading to potential large biases.
The gap between what people are willing to pay and what they are willing to accept for public goods is a big concern. Current methods undervalue public goods by a lot because they assume people are already spending their time and money optimally. But in reality, people might be spending too much on leisure and private goods, and not enough on public goods. This means that the value of public goods is underestimated in traditional analyses.