Economic Valuation by the Method of Paired Comparison, with Emphasis on Evaluation of the Transitivity Axiom

The paired comparison (PC) method is used to investigate reliability, transitiv-ity, and decision time for binary choices among goods and sums of money. The PC method reveals inconsistent choices and yields individual prefer-ence order over the set of items being compared. The data reported support the transitivity as-sumption and demonstrate high reliability for individual preference order. The paper also discusses using the PC method to obtain conser-vative median and mean estimates of willingness to accept compensation for public and private goods. The PC method may prove useful for valu-ing public goods, and warrants further study. (JEL 426) I.