Setting quality standards in the public sector: Some principles and an application

Abstract

The emergence of charters in public services has raised the issue of how charter standards should be set. Ideally, they should be set at a level such that the valuation of an improvement in quality equals the cost of making such an improvement. While the cost of quality improvements can often be established, the problem of valuing quality differences in public services has not yet been addressed. The authors argue that stated preference, a form of contingent valuation, might be used to establish such valuations. According to the method, respondents are asked to choose among alternative packages of qualities and quantities of public services, and their relative or monetary valuations are inferred from their replies. An example of the procedure is given, relating to the police service. The article recommends that the method be tested in other public services.