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Design efficiency for non-market valuation with choice modelling: how to measure it, what to report and why

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  • Riccardo Scarpa
  • John M. Rose

Abstract

We review the basic principles for the evaluation of design efficiency in discrete choice modelling with a focus on efficiency of WTP estimates from the multinomial logit model. The discussion is developed under the realistic assumption that researchers can plausibly define a prior belief on the range of values for the utility coefficients. D-, A-, B-, S- and C-errors are compared as measures of design performance in applied studies and their rationale is discussed. An empirical example based on the generation and comparison of fifteen separate designs from a common set of assumptions illustrates the relevant considerations to the context of non-market valuation, with particular emphasis placed on C-efficiency. Conclusions are drawn for the practice of reporting in non-market valuation and for future work on design research. Copyright 2008 The Authors. Journal compilation 2008 Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishing Asia Pty Ltd.

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Bibliographic Info

Article provided by Australian Agricultural and Resource Economics Society in its journal Australian Journal of Agricultural and Resource Economics.

Volume (Year): 52 (2008)
Issue (Month): 3 (09)
Pages: 253-282

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Handle: RePEc:bla:ajarec:v:52:y:2008:i:3:p:253-282

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Cited by:
  1. Robert Gillespie & Jeff Bennett, 2011. "Willingness to pay for kerbside recycling the Brisbane Region," Environmental Economics Research Hub Research Reports, Environmental Economics Research Hub, Crawford School of Public Policy, The Australian National University 1097, Environmental Economics Research Hub, Crawford School of Public Policy, The Australian National University.
  2. McCartney, Abbie & Cleland, Jonelle, 2010. "Choice Experiment Framing and Incentive Compatibility: observations from public focus groups," Research Reports, Australian National University, Environmental Economics Research Hub 107575, Australian National University, Environmental Economics Research Hub.
  3. Bliemer, Michiel C.J. & Rose, John M., 2013. "Confidence intervals of willingness-to-pay for random coefficient logit models," Transportation Research Part B: Methodological, Elsevier, Elsevier, vol. 58(C), pages 199-214.
  4. Peter Howley & Edel Doherty & Cathal Buckley & Stephen Hynes & Tom van Rensburg & Stuart Green, 2010. "Public access to the countryside: An exploration of the costs and benefits of farmland walking trails," Working Papers, Rural Economy and Development Programme,Teagasc 1006, Rural Economy and Development Programme,Teagasc.
  5. Rogers, Abbie A. & Cleland, Jonelle, 2010. "Comparing Scientist and Public Preferences for Conserving Environmental Systems: A Case of the Kimberley’s Tropical Waterways and Wetlands," Research Reports, Australian National University, Environmental Economics Research Hub 107579, Australian National University, Environmental Economics Research Hub.
  6. Czajkowski, Mikołaj & Bartczak, Anna & Giergiczny, Marek & Navrud, Stale & Żylicz, Tomasz, 2014. "Providing preference-based support for forest ecosystem service management," Forest Policy and Economics, Elsevier, Elsevier, vol. 39(C), pages 1-12.
  7. Saunders, Caroline M. & Guenther, Meike & Kaye-Blake, William & Miller, Sini & Tait, Peter R., 2010. "Consumer attitudes towards sustainability attributes on food labels," 2010 Conference, August 26-27, 2010, Nelson, New Zealand, New Zealand Agricultural and Resource Economics Society 96944, New Zealand Agricultural and Resource Economics Society.
  8. McNair, Ben J. & Hensher, David A. & Bennett, Jeff, 2010. "Modelling heterogeneity in response behaviour towards a sequence of discrete choice questions: a latent class approach," MPRA Paper 23427, University Library of Munich, Germany.
  9. Miko?aj Czajkowski & Maciej Sobolewski, 2011. "Measuring network effects in mobile telecommunications markets with stated-preference valuation methods," International Journal of Management and Network Economics, Inderscience Enterprises Ltd, Inderscience Enterprises Ltd, vol. 2(2), pages 197-215.
  10. McNair, Ben J. & Bennett, Jeff & Hensher, David A., 2011. "A comparison of responses to single and repeated discrete choice questions," Resource and Energy Economics, Elsevier, Elsevier, vol. 33(3), pages 554-571, September.
  11. Kelvin Balcombe & Iain Fraser, 2009. "A General Treatment of Non-Response Data From Choice Experiments Using Logit Models," Studies in Economics, Department of Economics, University of Kent 0916, Department of Economics, University of Kent.
  12. Yao, Richard T. & Scarpa, Riccardo & Turner, James A. & Barnard, Tim D. & Rose, John M. & Palma, João H.N. & Harrison, Duncan R., 2014. "Valuing biodiversity enhancement in New Zealand's planted forests: Socioeconomic and spatial determinants of willingness-to-pay," Ecological Economics, Elsevier, Elsevier, vol. 98(C), pages 90-101.
  13. Pluske, Johanna M. & Burton, Michael P. & Rigby, Dan & Vercoe, Philip E., 2009. "Cattle breeding in Northern Australia: Revealing how consumers react to new technologies," 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia, Australian Agricultural and Resource Economics Society 48167, Australian Agricultural and Resource Economics Society.
  14. Julia Martin-Ortega & Giacomo Giannoccaro & Julio Berbel, 2011. "Environmental and Resource Costs Under Water Scarcity Conditions: An Estimation in the Context of the European Water Framework Directive," Water Resources Management, Springer, Springer, vol. 25(6), pages 1615-1633, April.
  15. Faustin, Vidogbèna & Adégbidi, Anselme A. & Garnett, Stephen T. & Koudandé, Delphin O. & Agbo, Valentin & Zander, Kerstin K., 2010. "Peace, health or fortune?: Preferences for chicken traits in rural Benin," Ecological Economics, Elsevier, Elsevier, vol. 69(9), pages 1848-1857, July.
  16. Marsh, Dan & Baskaran, Ramesh, 2009. "Valuation of Water Quality Improvements in the Karapiro Catchment: A Choice Modelling Approach," 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia, Australian Agricultural and Resource Economics Society 47951, Australian Agricultural and Resource Economics Society.
  17. Balcombe, Kelvin & Burton, Michael & Rigby, Dan, 2011. "Skew and attribute non-attendance within the Bayesian mixed logit model," Journal of Environmental Economics and Management, Elsevier, vol. 62(3), pages 446-461.
  18. Anna Alberini & Stefania Tonin & Margherita Turvani, 2009. "The Value of Reducing Cancer Risks at Contaminated Sites: Are More Heavily Exposed People Willing to Pay More?," Working Papers, Fondazione Eni Enrico Mattei 2009.60, Fondazione Eni Enrico Mattei.

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