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Contingent Valuation and Real Economic Commitments: A Private Good Experiment

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  • K. G. Willis
  • N. A. Powe
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    Abstract

    The ultimate test of the accuracy of contingent valuation methods (CVM), in measuring benefits, is whether subjects will actually pay the amounts that they say they would be willing to pay in a CVM study. An experiment was conducted in which the maximum WTP of potential visitors to enter Warkworth Castle was compared against the acceptance of an entrance ticket at their stated CV price, thus providing a real monetary test of value and behavioural intention. Only 40% of potential visitors at the Castle gate were willing to make a real economic commitment following their CV WTP responses. Whilst the CVM results were found to be comparable with other CVM studies in terms of content and construct validity, they clearly failed a criterion validity test, even when the CVM survey was juxtaposed to the behavioural intention stage. CVM studies need to adopt stringent criteria in deciding the 'truthfulness' and 'legitimacy' of WTP responses, if CVM is to provide accurate and robust estimates of the value of environmental goods.

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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Journal of Environmental Planning and Management.

    Volume (Year): 41 (1998)
    Issue (Month): 5 ()
    Pages: 611-619

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    Handle: RePEc:taf:jenpmg:v:41:y:1998:i:5:p:611-619

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    Web page: http://www.tandfonline.com/CJEP20

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    Cited by:
    1. Prof Clem Tisdell & R. Bandara, 2003. "Does The Economic Value Of The Asian Elephant To Urban Dwellers Exceed Their Cost To The Farmers? A Sri Lankan Study," Discussion Papers Series 325, School of Economics, University of Queensland, Australia.
    2. K.G. Willis, 2002. "Research Note: Iterative Bid Design in Contingent Valuation and the Estimation of the Revenue Maximising Price for a Cultural Good," Journal of Cultural Economics, Springer, vol. 26(4), pages 307-324, November.
    3. Franke, Nikolaus & Hippel, Eric von, 2003. "Satisfying heterogeneous user needs via innovation toolkits: the case of Apache security software," Research Policy, Elsevier, vol. 32(7), pages 1199-1215, July.
    4. Daniel McFadden, 2009. "The human side of mechanism design: a tribute to Leo Hurwicz and Jean-Jacque Laffont," Review of Economic Design, Springer, vol. 13(1), pages 77-100, April.

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