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Ex ante analyses of agricultural practices often examine stated preference data, yet response behavior as a potential source of bias is often disregarded. We use survey data to estimate producers’ willingness to rent public land for rotational grazing in Wisconsin and combine it with information on nonrespondents to control for nonresponse and avidity effects. Previous experience with managed grazing and rental decisions influenced who responded as well as their rental intentions. These effects do not produce discernable bias but still encourage attention to this possibility in other ex ante contexts. Land rental determinants and willingness-to-pay estimates are also related to grazing initiatives.
Recent research examining voting behavior in contingent valuation referenda informs on how consequential survey respondents behave and its impact on willingness-to-pay (WTP) values. This research attempts to examine whether this behavior holds across population subgroups. We consider resident and nonresident users of artificial reefs and find improved construct validity for our resident models over nonresident models. Specifically, resident behavior is in line with a priori expectations with consequential residents more likely to vote in favor of a policy for additional reef funding – a result that is consistent with the “protest no” literature. Consequently, consequential resident voters exhibit a greater WTP than inconsequential voters. Nonresident behavior differs, however. For this subgroup, consequentiality does not influence voting behavior and WTP values do not differ by consequentiality. Overall, more work is required to appropriately identify WTP values for nonresident populations, particularly from a benefit-cost perspective, where appropriately identifying subgroup WTP values are a critical component of measuring the net present value of a given policy.
The Vulnerable snow leopard Panthera uncia experiences persecution across its habitat in Central Asia, particularly from herders because of livestock losses. Given the popularity of snow leopards worldwide, transferring some of the value attributed by the international community to these predators may secure funds and support for their conservation. We administered contingent valuation surveys to 406 international visitors to the Annapurna Conservation Area, Nepal, between May and June 2014, to determine their willingness to pay a fee to support the implementation of a Snow Leopard Conservation Action Plan. Of the 49% of visitors who stated they would pay a snow leopard conservation fee in addition to the existing entry fee, the mean amount that they were willing to pay was USD 59 per trip. The logit regression model showed that the bid amount, the level of support for implementing the Action Plan, and the number of days spent in the Conservation Area were significant predictors of visitors’ willingness to pay. The main reasons stated by visitors for their willingness to pay were a desire to protect the environment and an affordable fee. A major reason for visitors’ unwillingness to pay was that the proposed conservation fee was too expensive for them. This study represents the first application of economic valuation to snow leopards, and is relevant to the conservation of threatened species in the Annapurna Conservation Area and elsewhere.
While much is known about dyslexia in school-age children and adolescents, less is known about its effects on quality of life in adults. Using data from the Connecticut Longitudinal Study, we provide the first estimates of the monetary value of improving reading, speaking, and cognitive skills to dyslexic and nondyslexic adults. Using a stated-preference survey, we find that dyslexic and nondyslexic individuals value improvements in their skills in reading speed, reading aloud, pronunciation, memory, and information retrieval at about the same rate. Because dyslexics have lower self-reported levels on these skills, their total willingness to pay to achieve a high level of skill is substantially greater than for nondyslexics. However, dyslexic individuals’ willingness to pay (averaging $3000 for an improvement in all skills simultaneously) is small compared with the difference in earnings between dyslexic and nondyslexic adults. We estimate that dyslexic individuals earn 15% less per year (about $8000) than nondyslexic individuals. Although improvements in reading, speaking, and cognitive skills in adulthood are unlikely to eliminate the earnings difference that reflects differences in educational attainment and other factors, stated-preference estimates of the value of cognitive skills may substantially underestimate the value derived from effects on lifetime earnings and health.
Dans cette étude, nous nous intéressons au problème de l'ancrage dans les enquêtes d'évaluation contingente à doubles offres successives. Un tel problème apparaît lorsque les réponses obtenues sont influencées par les offres proposées aux individus.
Nous proposons une méthodologie, issue de la psychologie, afin de caractériser deux groupes distincts d'individus : un groupe sensible à l'ancrage et un autre qui ne l'est pas. Adaptant un modèle, proposé par Herriges and Shogren (1996) pour contrôler l'ancrage, nous montrons que la prise en compte d'une telle hétérogénéité permet d'obtenir des estimations plus précises que celles obtenues avec la prise en compte d'une seule offre. Ce résultat contraste avec ceux de la littérature, qui trouvent que le gain de précision obtenu avec la prise en compte d'une deuxième offre est en général perdu en présence d'ancrage significatif, à tel point qu'il vaut mieux ne pas proposer une deuxième offre.
Survey-based contingent valuation (CV) techniques are commonly used to value the potential effects of a policy change when market-based valuation of those effects is not possible. The results of these analyses are often intended to inform policy decisions, which are made within the context of formal policymaking institutions. These institutions are typically designed to reduce the large number of potential options for addressing any given policy problem to a binary choice between the continuation of current policy and a single, specified alternative. In this research we develop an approach for conducting CV exercises in a manner consistent with the decision structure typically faced by policymakers. The data generated from this approach allow for an estimate of willingness to pay (WTP) for a defined policy alternative, relative to leaving policy unchanged, which we argue is of direct interest to policymakers. We illustrate our approach within the context of policy governing the storage of used nuclear fuel in the United States. We value the policy option of constructing an interim storage facility relative to continuation of current policy, wherein used nuclear fuel is stored on-site at or near commercial nuclear generating plants. We close the paper with a discussion of the implications for future research and the role of CV in the policymaking process.
Ecolabeling allows firms to segment a market by informing consumers about unobservable attributes of a product. Previous studies evaluate consumer preferences for products explicitly labeled as possessing positive environmental attributes. This research evaluates consumers’ willingness to pay for a product that is perceived by the consumer as having environmentally friendly attributes. We explore glass packaging for fluid milk as a case study. Data were collected through a contingent valuation survey, and a bound-and-a-half logit model was employed. The estimated premium is 59.78 cents with a premium between $0.73 and $0.92 for consumers more likely to prefer the glass alternative.
A growing body of literature demonstrates that many behavioral anomalies observed in stated-preference elicitation methods such as the contingent valuation method are also observed in actual choices and vice versa. This presentation furthers the argument that such parallel behaviors should be viewed as a strength of stated-preference methods. Three well-known anomalies observed in both stated preferences and actual choices are first reviewed to lay the foundation for this argument. A number of lesser-known anomalies are then presented to demonstrate the wider prevalence of parallel anomalies in stated preferences and actual choices.
Producing biomass energy requires extensive land resources. In western Massachusetts, where almost 90 percent of former farmland is no longer in commercial use, we study factors that motivate landowners to grow biomass energy crops. A geographic information system model identifies a landowner population, and a contingent valuation survey reveals payments landowners are willing to accept (WTA) for growing biomass crops. The median WTA estimate is $321 per hectare per year, which is high compared to regional land rental rates. Nonpecuniary factors appear to be as important in landowner acceptance as profit opportunities, especially for nonfarmer landowners.
In traditional contingent valuation, the researcher seeks the amount a respondent is willing, ceteris paribus, to pay to obtain something. But if a respondent receives a “warm glow” from a yes response, ceteris is not paribus. In estimating willingness to pay (WTP) to reduce environmental impacts from consumption of transportation fuel, we find that respondents who were relatively less environmentally focused in the past receive greater warm-glow benefits from a “yes” response and have greater “warm” WTP (WTP that includes warm-glow benefits). Yet respondents who were relatively more environmentally focused in the past have greater “cold” WTP (WTP excluding warm-glow benefits).
Much is known about private financial returns to education in the form of higher earnings. Less is known about how much social value exceeds this private value. Associations between education and socially-desirable outcomes are strong, but disentangling the effect of education from other causal factors is challenging. The purpose of this paper is to estimate the social value of one form of higher education. We elicit willingness to pay for the Kentucky Community and Technical College System (KCTCS) directly and compare our estimate of total social value to our estimates of private value in the form of increased earnings. Our earnings estimates are based on two distinct data sets, one administrative and one from the U.S. Census. The difference between the total social value and the increase in earnings is our measure of the education externality and the private, non-market value combined. Our work differs from previous research by focusing on education at the community college level and by eliciting values directly through a stated-preferences survey in a way that yields a total value including any external benefits. Our preferred estimates indicate the social value of expanding the system exceeds private financial value by at least 25% with a best point estimate of nearly 90% and exceeds total private value by at least 15% with a best point estimate of nearly 60%.
We present a demonstration of a Bayesian spatial probit model for a dichotomous choice contingent valuation method willingness-to-pay (WTP) questions. If voting behavior is spatially correlated, spatial interdependence exists within the data, and standard probit models will result in biased and inconsistent estimated nonbid coefficients. Adjusting sample WTP to population WTP requires unbiased estimates of the nonbid coefficients, and we find a $17 difference in population WTP per household in a standard vs. spatial model. We conclude that failure to correctly model spatial dependence can lead to differences in WTP estimates with potentially important policy ramifications.
In contingent valuation surveys, there is a range of possible explanations for zero bids, from true zero responses consistent with economic decisions to protest responses. According to the empirical literature, which analyzes the determinants of willingness-to-pay (WTP) values from a bidding process, the double-hurdle is the most appropriate econometric approach to account for zero and protest WTP. However, when the number of protest responses is too small to be explicitly modelled, this approach is not applicable. This frequently occurs in critical health care situations, where large samples are not easily available. We discuss the possible econometric strategies for use in such cases. For illustrative purposes, the different models were applied to an empirical situation, which refers to the location preference (i.e. home versus hospital) from French cancer patients for blood transfusion. Our results show that protest responses should not be discarded, even if present in small numbers, and that the type II Tobit and the standard truncated regression model could both be applied. However, since from small finite samples, the most robust estimation is obtained from the bootstrap method with a high number of replications, the truncated regression model, easily applicable, weakly computer time-consuming and not subject to identification problems in this case contrary to the type II Tobit, should be the econometric strategy of choice for various WTP studies in the healthcare field.
Systematic supervision procedures have been proposed to improve contingent valuation surveying, particularly in developing countries. Surprisingly, the CV literature does not say much about the potential effects of supervision even though there is evidence of interviewer effects and social desirability issues that can bias results. This paper investigates the effects of interview supervision on the valuation of public services, using split-sample treatments to include a test of scope of a nested good and to assess the effect of interview supervision on reported WTP. Results suggest that supervisors can be used to improve quality with no effect on WTP estimates.
In the field of health care management, contingent valuation surveys (CV) are used in cost benefit analyses (CBA) to elicit patients’ monetary valuation of program benefits. We considered the empirical situation of blood transfusions (BT) in cancer patients. Before planning such a CBA, we had to make sure that the CV approach could be used in a particularly critical clinical situation to estimate the marginal benefit of changing from hospital BT to home BT. The fact that the CV approach is feasible and acceptable to severely ill patients was not taken for granted a priori.
We measured patient’s willingness-to-pay (WTP) for home BT in a sample of 139 patients who received transfusions either at home or in the hospital. After considering patient’s participation to the survey and protest responses, we identified possible determinants of WTP values derived from previous knowledge, then we compared their expected influences to predicted influences resulting from econometric analysis to assess the validity of our results. Participation was high (90%) and few patients gave protest responses. Most patients (65%) had received home care, including 43% BT. The median WTP for home BT was 26.5 € per patient.
Good consistency was observed between the expected and predicted influences of possible determinants of WTP. The anchoring bias hypothesis was confirmed. The WTP for home BT increased with previous experience of home care, age, living far from the hospital and low quality of life. Our CV approach is thus a first contribution to the debate on the appropriateness of generalizing access to home BT. However, our results would be worth confirming with a formal cost-benefit analysis.
One of the major difficulties in doing benefit-cost analyses of a development project is to estimate a total economic value of the project benefits, which are usually multi-dimensional and include goods and services that are not traded in the market, and challenges also arise in aggregating the values of different benefits, which may not be mutually exclusive. This paper presents an analysis of a non-motorized transport project in Pune, India, which uses the contingent valuation method to estimate the total value of the project benefits across beneficiaries. A sample of the project beneficiaries are presented with a detailed description of the project and then are asked to vote on whether such a project should be undertaken given different specifications of costs to their households. A function of willingness-to-pay for the project is then derived from the survey answers and the key determinants are found to include household income, distance to the project streets, current use of the transportation modes, future use of the project streets, predicted impacts of the project, and level of trust in the government. The total willingness-to-pay of the local residents is found to be smaller than the total cost of an initial design of the project. Heteroskedasticity is also found to present in the willingness-to-pay models.
Human activities may have detrimental effects on biodiversity, and appropriate economic valuation of biodiversity can provide additional motivation to protect it. To date, there are no estimates of visitor values for landscape and wildlife changes in the North Pennines (UK) and very few studies have explored competing influences of landscape and biodiversity in public preferences. Contingent valuation estimates of visitor values for the North Pennines landscape and biodiversity, as expressed in voluntary contributions, were used to assess the importance of different factors in influencing these valuations. Policy-linked scenarios were developed, each representing the outcome of a particular policy direction such as grouse-moor specific subsidies, back-to-nature subsidies, or a ban or decline in red grouse shooting. The influence of management information provision was tested and economic values were elicited for a number of alternatives. Landscape and biodiversity were both found to be important in preference formation. In particular, respondents highly valued a mosaic landscape with increases in blanket bog and the associated increases in rare and threatened birds and mammals. Notably, significant negative valuations were obtained for some of the scenarios presented. Provision of land use information did not significantly influence visitors' valuations, a surprising result given the controversial nature of one of the primary land uses, namely red grouse shooting.
In the last settler's syndrome, each new settler wants the area to remain as it was on their arrival. Newcomers' preferences often differ from long-term residents, and conflicts arise. To explore land use issues among various groups, a survey of opinions on mountain views was developed and administered to Watauga County residents in western North Carolina. Watauga County provides an interesting case study, because it is a growing area with an influx of newcomers along with long-time residents. The results suggest that agreements can be achieved on some land use issues, whereas disagreements will arise on others.
Willingness to pay (WTP) estimation typically involves some strategy for mapping nondichotomous contingent valuation (CV) responses onto a dichotomous yes/no dependent variable. We propose a new approach to selecting which responses qualify as ‘yes.’ We apply the proposed method to polychotomous CV data for preventative land management programs in the Great Basin. We also estimate WTP using other methods of response recoding found in the literature. By contrasting the results under different approaches, we demonstrate how and why WTP point estimates vary across recoding methods and discuss the comparative advantages of our more generalized recoding approach that is based on predicted probabilities of ‘yes’ responses.
The assumption of independence of irrelevant alternatives in a sequential contingent valuation format should be questioned. Statistically, most valuation studies treat nonindependence as a consequence of unobserved individual effects. Another approach is to consider an inferential process in which any particular choice is part of a general choosing strategy of a survey respondent. A stochastic model is suggested, consistent with the reflexivity, transitivity, and continuity axioms of utility analysis. An application of this theoretical model to the valuation of watershed ecosystem restoration demonstrates that an empirical model recognizing reflexivity and transitivity, and also allowing for continuity, shows the highest in-sample predictive ability.