About positive and negative synergies of social projects: Treating correlation in participatory value evaluation

Participatory value evaluation (PVE) is a novel method aiming at the evaluation of projects from a societal perspective. It aims at establishing which investment projects or investment portfolios (with a portfolio containing multiple investment projects) are likely to be favored by the population, given a limited budget. The approach emulates the decision-making problem faced by policy-makers. The ultimate end of PVE is to evaluate and establish how individuals value attributes of public projects in order to construct social trade-offs between different attributes and investments projects. However, it is important to consider that when investment portfolios consist of more than one investment project, significant synergies (positive and negative) may exist among the projects. This paper proposes a new evaluation framework that allows addressing synergies among projects in the context of PVE, while also offering a highly flexible structure. The approach is tested making use of one synthetic and two real datasets. Results show that neglecting synergies among the utilities of the projects included in the chosen portfolio majorly reduces the model fit and biases the estimators.