Contingent Valuation: From Dubious to Hopeless
AbstractApproximately 20 years ago, Peter Diamond and I wrote an article for this journal analyzing contingent valuation methods. At that time Peter's view was that contingent valuation was hopeless, while I was dubious but somewhat more optimistic. But 20 years later, after millions of dollars of largely government-funded research, I have concluded that Peter's earlier position was correct and that contingent valuation is hopeless. In this paper, I selectively review the contingent valuation literature, focusing on empirical results. I find that three long-standing problems continue to exist: 1) hypothetical response bias that leads contingent valuation to overstatements of value; 2) large differences between willingness to pay and willingness to accept; and 3) the embedding problem which encompasses scope problems. The problems of embedding and scope are likely to be the most intractable. Indeed, I believe that respondents to contingent valuation surveys are often not responding out of stable or well-defined preferences, but are essentially inventing their answers on the fly, in a way which makes the resulting data useless for serious analysis. Finally, I offer a case study of a prominent contingent valuation study done by recognized experts in this approach, a study that should be only minimally affected by these concerns but in which the answers of respondents to the survey are implausible and inconsistent.
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Bibliographic InfoArticle provided by American Economic Association in its journal Journal of Economic Perspectives.
Volume (Year): 26 (2012)
Issue (Month): 4 (Fall)
Find related papers by JEL classification:
- Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources
- Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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- Hausman, Jerry A, 1981. "Exact Consumer's Surplus and Deadweight Loss," American Economic Review, American Economic Association, vol. 71(4), pages 662-76, September.
RePEc Biblio mentionsAs found on the RePEc Biblio, the curated bibliography for Economics:
- > Environmental and Natural Resource Economics > Environmental Economics > Valuation > Contingent valuation method
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13-14, Center for Economic Studies, U.S. Census Bureau.
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- Petrolia, Daniel R. & Interis, Matthew G. & Hwang, Joonghyun, 2013.
"America’s Wetland? A National Survey of Willingness to Pay for Restoration of Louisiana’s Coastal Wetlands,"
2013 Annual Meeting, February 2-5, 2013, Orlando, Florida
142305, Southern Agricultural Economics Association.
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- John C. Whitehead & O. Ashton Morgan & William L. Huth & Gregory S. Martin & Richard Sjolander, 2012. "Willingness-to-Pay for Oyster Consumption Mortality Risk Reductions," Working Papers 12-07, Department of Economics, Appalachian State University.
- Kiefer, Stephanie, 2014. "Are riding club members willing to pay or work for an overall quality improvement?," Discussion Papers of the Institute for Organisational Economics 1/2014, University of Münster, Institute for Organisational Economics.
- Andersson, Henrik & Risa Hole, Arne & Svensson, Mikael, 2014.
"Valuation of small and multiple health risks: A critical analysis of SP data applied to food and water safety,"
Karlstad University Working Papers in Economics
11, Department of Economics, Karlstad University.
- Henrik Andersson & Arne Risa Hole & Mikael Svensson, 2014. "Valuation of Small and Multiple Health Risks: A Critical Analysis of SP Data Applied to Food and Water Safety," Working Papers 2014005, The University of Sheffield, Department of Economics.
- Andersson, Henrik & Hole, Arne Risa & Svensson, Mikael, 2013. "Valuation of small and multiple health risks: A critical analysis of SP data applied to food and water safety," TSE Working Papers 13-465, Toulouse School of Economics (TSE).
- John C. Whitehead & Douglas Noonan & Elizabeth Marquardt, 2012. "Criterion and Predictive Validity of Revealed and Stated Preference Data: The Case of Music Concert Demand," Working Papers 12-05, Department of Economics, Appalachian State University.
- Arik Levinson, 2013. "Happiness as a Public Policy Tool," Working Papers gueconwpa~13-13-04, Georgetown University, Department of Economics.
- Hernández-Díaz, Alfredo G. & García Cobián, Emilio Carlos, 2014. "Elasticidad precio de la demanda y perfil de los usuarios de la parada “Pablo de Olavide" de Metro de Sevilla || Price Elasticity of Demand and Profile of “Pablo de Olavide" Metro Stop's," Revista de Métodos Cuantitativos para la Economía y la Empresa = Journal of Quantitative Methods for Economics and Business Administration, Universidad Pablo de Olavide, Department of Quantitative Methods for Economics and Business Administration, vol. 17(1), pages 80-100, June.
- Timothy C. Haab & Matthew G. Interis & Daniel R. Petrolia & John C. Whitehead, 2013.
"From Hopeless to Curious? Thoughts on Hausman’s “Dubious to Hopeless” Critique of Contingent Valuation,"
13-07, Department of Economics, Appalachian State University.
- Timothy C. Haab & Matthew G. Interis & Daniel R. Petrolia & John C. Whitehead, 2013. "From Hopeless to Curious? Thoughts on Hausman's 'Dubious to Hopeless' Critique of Contingent Valuation," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 35(4), pages 593-612.
- Shi, Lijia & Gao, Zhifeng & Chen, Xuqi, 2014. "The cross-price effect on willingness-to-pay estimates in open-ended contingent valuation," Food Policy, Elsevier, vol. 46(C), pages 13-21.
- Loomis, John B., 2014. "2013WAEA Keynote Address: Strategies for Overcoming Hypothetical Bias in Stated Preference Surveys," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 39(1), April.
- Baker, Rick & Ruting, Brad, 2014. "Environmental Policy Analysis: A Guide to Non‑Market Valuation," 2014 Conference (58th), February 4-7, 2014, Port Maquarie, Australia 165810, Australian Agricultural and Resource Economics Society.
- Heinz Welsch & Susana Ferreira, 2014. "Environment, Well-Being, and Experienced Preference," Working Papers V-367-14, University of Oldenburg, Department of Economics, revised May 2014.
- John Whitehead & Melissa S. Weddell & Pete Groothuis, 2014. "Mitigating Hypothetical Bias in Stated Preference Data: Evidence from Sports Tourism," Working Papers 14-06, Department of Economics, Appalachian State University.
- Arik Levinson, 2013. "Happiness, Behavioral Economics, and Public Policy," NBER Working Papers 19329, National Bureau of Economic Research, Inc.
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