A Spatial Probit Modeling Approach to Account for Spatial Spillover Effects in Dicotomous Choice Contingent Valuation Surveys
AbstractWe 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 populationWTP 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.
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Bibliographic InfoArticle provided by Southern Agricultural Economics Association in its journal Journal of Agricultural and Applied Economics.
Volume (Year): 45 (2013)
Issue (Month): 01 (February)
Bayesian estimation; contingent valuation; spatial probit; willingness to pay; Environmental Economics and Policy; C11; Q51;
Find related papers by JEL classification:
- C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
- Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
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