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Application of Sample Selection Model to Double-Bounded Dichotomous Choice Contingent Valuation Studies

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  • Seung-Hoon Yoo

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  • Hee-Jong Yang
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    Abstract

    Modeling households' behavior with the data from a contingentvaluation (CV) survey is often complicated by samplenon-response, which can cause non-response bias and sampleselection bias, leading to inconsistent parameter estimates and adistorted mean willingness-to-pay estimate. This paper reportsthe results of empirical tests for both biases using householdsurvey data in which the double-bounded dichotomous choice CVquestion involved the benefit of a tap water quality improvementpolicy in Korea. No non-response bias, but sample selection bias,is detected in the sample. To correct for sample selection bias,a sample selection model is employed. The authors also discusshow failure to correct for bias may distort aggregate benefitestimates. Copyright Kluwer Academic Publishers 2001

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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): 20 (2001)
    Issue (Month): 2 (October)
    Pages: 147-163

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    Handle: RePEc:kap:enreec:v:20:y:2001:i:2:p:147-163

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

    Related research

    Keywords: contingent valuation; non-response; sample selection bias; tap water quality;

    References

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    1. Eklöf, Jan & Karlsson, Sune, 1997. "Testing and Correcting for Sample Selection Bias in Discrete Choice Contingent Valuation Studies," Working Paper Series in Economics and Finance 171, Stockholm School of Economics, revised 23 Jun 1999.
    2. Bateman, Ian J. & Langford, Ian H. & Jones, Andrew P. & Kerr, Geoffrey N., 2001. "Bound and path effects in double and triple bounded dichotomous choice contingent valuation," Resource and Energy Economics, Elsevier, vol. 23(3), pages 191-213, July.
    3. Ian Langford & Ian Bateman & Hugh Langford, 1996. "A multilevel modelling approach to triple-bounded dichotomous choice contingent valuation," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 7(3), pages 197-211, April.
    4. Alberini Anna, 1995. "Efficiency vs Bias of Willingness-to-Pay Estimates: Bivariate and Interval-Data Models," Journal of Environmental Economics and Management, Elsevier, vol. 29(2), pages 169-180, September.
    5. Vella, F, 1992. "Simple Tests for Sample Selection Bias in Censored and Discrete Choice Models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 7(4), pages 413-21, Oct.-Dec..
    6. Cameron, Trudy Ann & James, Michelle D, 1987. "Efficient Estimation Methods for "Closed-ended' Contingent Valuation Surveys," The Review of Economics and Statistics, MIT Press, vol. 69(2), pages 269-76, May.
    7. Willig, Robert D, 1976. "Consumer's Surplus without Apology," American Economic Review, American Economic Association, vol. 66(4), pages 589-97, September.
    8. Richard Carson & Theodore Groves, 2007. "Incentive and informational properties of preference questions," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 37(1), pages 181-210, May.
    9. Amemiya, Takeshi, 1984. "Tobit models: A survey," Journal of Econometrics, Elsevier, vol. 24(1-2), pages 3-61.
    10. Steven F. Edwards & Glen D. Anderson, 1987. "Overlooked Biases in Contingent Valuation Surveys: Some Considerations," Land Economics, University of Wisconsin Press, vol. 63(2), pages 168-178.
    11. McConnell, K. E., 1990. "Models for referendum data: The structure of discrete choice models for contingent valuation," Journal of Environmental Economics and Management, Elsevier, vol. 18(1), pages 19-34, January.
    12. Carson, Richard T. & Hanemann, W. Michael, 2006. "Contingent Valuation," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 2, chapter 17, pages 821-936 Elsevier.
    13. Trudy Ann Cameron & John Quiggin, 1992. "Estimation Using Contingent Valuation Data From a "Dichotomous Choice with Follow-Up" Questionnaire," UCLA Economics Working Papers 653, UCLA Department of Economics.
    14. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
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    Cited by:
    1. Liu, Jin-Tan & Tsou, Meng-Wen & Hammitt, James K., 2009. "Willingness to pay for weight-control treatment," Health Policy, Elsevier, vol. 91(2), pages 211-218, July.
    2. Owusu, Victor & Owusu, Michael Anifori, 2010. "Measuring Market Potential for Fresh Organic Fruit and Vegetable in Ghana," 2010 AAAE Third Conference/AEASA 48th Conference, September 19-23, 2010, Cape Town, South Africa 95955, African Association of Agricultural Economists (AAAE) & Agricultural Economics Association of South Africa (AEASA).
    3. Yoo, Seung-Hoon & Lim, Hea-Jin & Kwak, Seung-Jun, 2009. "Estimating the residential demand function for natural gas in Seoul with correction for sample selection bias," Applied Energy, Elsevier, vol. 86(4), pages 460-465, April.
    4. Garcia, Serge & Harou, Patrice & Montagné, Claire & Stenger, Anne, 2009. "Models for sample selection bias in contingent valuation: Application to forest biodiversity," Journal of Forest Economics, Elsevier, vol. 15(1-2), pages 59-78, January.
    5. John C. Whitehead, 2006. "Improving Willingness to Pay Estimates for Quality Improvements through Joint Estimation with Quality Perceptions," Southern Economic Journal, Southern Economic Association, vol. 73(1), pages 100–111, July.
    6. Stephane Luchini & Verity Watson, 2008. "Does respondent uncertainty explain framing effects in double bounded contingent valuation?," Working Papers halshs-00285861, HAL.
    7. Schlapfer, Felix, 2006. "Survey protocol and income effects in the contingent valuation of public goods: A meta-analysis," Ecological Economics, Elsevier, vol. 57(3), pages 415-429, May.
    8. Cho, Seong-Hoon & Yen, Steven T. & Bowker, James Michael & Newman, David H., 2008. "Modeling Willingness to Pay for Land Conservation Easements: Treatment of Zero and Protest Bids and Application and Policy Implications," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 40(01), April.
    9. Lyssenko, Nikita & Martinez-Espineira, Roberto, 2009. "`Been there done that': Disentangling option value effects from user heterogeneity when valuing natural resources with a use component," MPRA Paper 21976, University Library of Munich, Germany, revised 08 Apr 2010.

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