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Donation Payment Mechanisms and Contingent Valuation: An Empirical Study of Hypothetical Bias

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  • Patricia Champ

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  • Richard Bishop
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    Abstract

    Donation payment mechanisms are well suited forsome contingent valuation studies. In aneffort to better understand the discrepancythat has been consistently found between actualand hypothetical donations, we investigate anapproach to estimating actual willingness todonate using contingent donations with afollow-up question in which respondents ratethe level of certainty about their response tothe contingent donation question. The approachallows us to estimate the magnitude of thehypothetical bias and identify the respondentsresponsible for the bias. Identification ofthe respondents responsible for thehypothetical bias is the first step towarddeveloping an understanding of the causes andpossible remedies. In this study we find thatmost of the respondents (80%) to thecontingent donation question provide a responseconsistent with how we predict they wouldrespond in an actual donation situation. Copyright Kluwer Academic Publishers 2001

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    File URL: http://hdl.handle.net/10.1023/A:1011604818385
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    Bibliographic Info

    Article provided by European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

    Volume (Year): 19 (2001)
    Issue (Month): 4 (August)
    Pages: 383-402

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    Handle: RePEc:kap:enreec:v:19:y:2001:i:4:p:383-402

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    Web page: http://www.springerlink.com/link.asp?id=100263

    Related research

    Keywords: actual donations; calibration; contingent donations; contingent valuation; hypothetical bias; uncertainty;

    References

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    1. R. K. Blamey & J. W. Bennett & M. D. Morrison, 1999. "Yea-Saying in Contingent Valuation Surveys," Land Economics, University of Wisconsin Press, vol. 75(1), pages 126-141.
    2. Richard C. Ready & Ståle Navrud & RW. Richard Dubourg, 2001. "How Do Respondents with Uncertain Willingness to Pay Answer Contingent Valuation Questions?," Land Economics, University of Wisconsin Press, vol. 77(3), pages 315-326.
    3. Brian Byrnes & Clive Jones† & Sandra Goodman‡, 1999. "Contingent Valuation and Real Economic Commitments: Evidence from Electric Utility Green Pricing Programmes," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 42(2), pages 149-166.
    4. Welsh, Michael P. & Poe, Gregory L., 1998. "Elicitation Effects in Contingent Valuation: Comparisons to a Multiple Bounded Discrete Choice Approach," Journal of Environmental Economics and Management, Elsevier, vol. 36(2), pages 170-185, September.
    5. Spencer, Michael A. & Swallow, Stephen K. & Miller, Christopher J., 1998. "Valuing Water Quality Monitoring: A Contingent Valuation Experiment Involving Hypothetical And Real Payments," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 27(1), April.
    6. Carson, Richard T & Groves, Theodore, 2010. "Incentive and Information Properties of Preference Questions," University of California at San Diego, Economics Working Paper Series qt88d8644g, Department of Economics, UC San Diego.
    7. Kopp, Raymond & Smith, V. Kerry & Mitchell, Robert & Presser, Stanley & Ruud, Paul & Hanemann, W. Michael & Krosnick, Jon & Carson, Richard, 1995. "Referendum Design and Contingent Valuation: The NOAA Panel's No-Vote Recommendation," Discussion Papers dp-96-05, Resources For the Future.
    8. Chilton, Susan M. & Hutchinson, W. George, 1999. "Some Further Implications of Incorporating the Warm Glow of Giving into Welfare Measures: A Comment on the Use of Donation Mechanisms by Champet al," Journal of Environmental Economics and Management, Elsevier, vol. 37(2), pages 202-209, March.
    9. Seip, K. & Strand, J., 1990. "Willingness To Pay For Environmental Goods In Norway: A Contingent Valuation Study With Real Payment," Memorandum 12/1990, Oslo University, Department of Economics.
    10. Thomas C. Brown & Patricia A. Champ & Richard C. Bishop & Daniel W. McCollum, 1996. "Which Response Format Reveals the Truth about Donations to a Public Good?," Land Economics, University of Wisconsin Press, vol. 72(2), pages 152-166.
    11. Cummings, Ronald G, et al, 1997. "Are Hypothetical Referenda Incentive Compatible?," Journal of Political Economy, University of Chicago Press, vol. 105(3), pages 609-21, June.
    12. Poe, Gregory L. & Clark, Jeremy & Schulze, William D., 1997. "Can Hypothetical, Questions Predict Actual, Participation In Public Programs? A Field Validity Test Using A Provision Point Mechanism," Working Papers 7264, Cornell University, Department of Applied Economics and Management.
    13. Champ, Patricia A. & Bishop, Richard C. & Brown, Thomas C. & McCollum, Daniel W., 1997. "Using Donation Mechanisms to Value Nonuse Benefits from Public Goods," Journal of Environmental Economics and Management, Elsevier, vol. 33(2), pages 151-162, June.
    14. Loomis John & Lockwood Michael & DeLacy Terry, 1993. "Some Empirical Evidence on Embedding Effects in Contingent Valuation of Forest Protection," Journal of Environmental Economics and Management, Elsevier, vol. 25(1), pages 45-55, July.
    15. Ready Richard C. & Whitehead John C. & Blomquist Glenn C., 1995. "Contingent Valuation When Respondents Are Ambivalent," Journal of Environmental Economics and Management, Elsevier, vol. 29(2), pages 181-196, September.
    16. William D. Schulze & Ralph C. d'Arge & David S. Brookshire, 1981. "Valuing Environmental Commodities: Some Recent Experiments," Land Economics, University of Wisconsin Press, vol. 57(2), pages 151-172.
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    1. > Environmental and Natural Resource Economics > Environmental Economics > Valuation > Contingent valuation method > Hypothetical bias
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