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Dichotomous choice contingent valuation probability distributions

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  • Kerr, Geoffrey N.

Abstract

Parametric distributions applied to dichotomous choice contingent valuation data invoke assumptions about the distribution of willingness to pay that may contravene economic theory. This article develops and applies distributions that allow the shape of bid distributions to vary. Alternative distributions provide little, if any, improvement in statistical fit from commonly used distributions. While median willingness to pay is largely invariant to distribution, estimates of mean consumer surplus diverge widely. Sensitivity analysis to determine benefit measure response to distributional assumptions is essential to prevent erroneous policy advice from applied dichotomous choice research.

Suggested Citation

  • Kerr, Geoffrey N., 2000. "Dichotomous choice contingent valuation probability distributions," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 44(2), pages 1-20.
    • Handle: RePEc:ags:aareaj:117836
    DOI: 10.22004/ag.econ.117836
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    References listed on IDEAS

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    3. Norbert Brunner & Vijay Mishra & Ponnusamy Sakthivel & Markus Starkl & Christof Tschohl, 2015. "The Human Right to Water in Law and Implementation," Laws, MDPI, vol. 4(3), pages 1-59, August.
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    6. Mikołaj Czajkowski & Ewa Zawojska & Norman Meade & Ronaldo Seroa da Motta & Mike Welsh & Ramon Arigoni Ortiz, 2022. "On the inference about willingness to pay distribution using contingent valuation data," Working Papers 2022-08, Faculty of Economic Sciences, University of Warsaw.
    7. Lee, Chul-Yong & Heo, Hyejin, 2016. "Estimating willingness to pay for renewable energy in South Korea using the contingent valuation method," Energy Policy, Elsevier, vol. 94(C), pages 150-156.
    8. Railey, Ashley F. & Lankester, Felix & Lembo, Tiziana & Reeve, Richard & Shirima, Gabriel & Marsh, Thomas L., 2019. "Enhancing livestock vaccination decision-making through rapid diagnostic testing," World Development Perspectives, Elsevier, vol. 16(C).
    9. Chin-Huang Huang & Chiung-Hsia Wang, 2015. "Estimating the Total Economic Value of Cultivated Flower Land in Taiwan," Sustainability, MDPI, vol. 7(4), pages 1-19, April.
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