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Evidence of range bias in contingent valuation payment scales

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  • David K. Whynes

    (School of Economics, University of Nottingham, UK)

  • Jane L. Wolstenholme

    (Health Economics Research Centre, University of Oxford, UK)

  • Emma Frew

    (Health Economics Facility, University of Birmingham, UK)

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    Abstract

    The payment scale format has been widely used in willingness-to-pay studies in health care. Concerns have been expressed that the format is, in theory, prone to range bias, although this proposition has not been tested directly. We report the findings of a contingent valuation questionnaire study of colorectal cancer screening, wherein different subjects were provided with payment scales of two different lengths. Whilst the long-scale instrument included scale values up to £1000, the short-scale version extended only to £100. After controlling for inter-sample differences in, for example, income, education and health behaviour, it emerged that the long-scale instrument produced a mean willingness to pay more than 30% higher than that resulting from the short-scale version. We believe our findings to be strongly supportive of the likelihood of range bias in payment-scale instruments, with important consequences for the estimation of both average valuation and consumer surplus. Copyright © 2003 John Wiley & Sons, Ltd.

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    File URL: http://hdl.handle.net/10.1002/hec.809
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    Bibliographic Info

    Article provided by John Wiley & Sons, Ltd. in its journal Health Economics.

    Volume (Year): 13 (2004)
    Issue (Month): 2 ()
    Pages: 183-190

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    Handle: RePEc:wly:hlthec:v:13:y:2004:i:2:p:183-190

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    Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/5749

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    1. Cameron, Trudy Ann, 1987. "The impact of grouping coarseness in alternative grouped-data regression models," Journal of Econometrics, Elsevier, vol. 35(1), pages 37-57, May.
    2. Spash, Clive L., 2000. "Ecosystems, contingent valuation and ethics: the case of wetland re-creation," Ecological Economics, Elsevier, vol. 34(2), pages 195-215, August.
    3. Neilson, Aileen R. & Whynes, David K., 1995. "Determinants of persistent compliance with screening for colorectal cancer," Social Science & Medicine, Elsevier, vol. 41(3), pages 365-374, August.
    4. Carson, Richard T & Flores, Nicholas A, 2000. "Contingent Valuation: Controversies and Evidence," University of California at San Diego, Economics Working Paper Series qt75k752s7, Department of Economics, UC San Diego.
    5. Klose, Thomas, 1999. "The contingent valuation method in health care," Health Policy, Elsevier, vol. 47(2), pages 97-123, May.
    6. A Diener & B O'Brien & A Gafni, 1997. "Health Care Contingent Valuation Studies: A review and classification of the literature," Centre for Health Economics and Policy Analysis Working Paper Series 1997-07, Centre for Health Economics and Policy Analysis (CHEPA), McMaster University, Hamilton, Canada.
    7. Jorgensen, Bradley S. & Syme, Geoffrey J., 2000. "Protest responses and willingness to pay: attitude toward paying for stormwater pollution abatement," Ecological Economics, Elsevier, vol. 33(2), pages 251-265, May.
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    Citations

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    Cited by:
    1. David Whynes & Emma Frew & Jane Wolstenholme, 2005. "Willingness-to-Pay and Demand Curves: A Comparison of Results Obtained Using Different Elicitation Formats," International Journal of Health Care Finance and Economics, Springer, vol. 5(4), pages 369-386, December.
    2. Smith, Richard D., 2005. "Sensitivity to scale in contingent valuation: the importance of the budget constraint," Journal of Health Economics, Elsevier, vol. 24(3), pages 515-529, May.
    3. van Exel, N.J.A. & Brouwer, W.B.F. & van den Berg, B. & Koopmanschap, M.A., 2006. "With a little help from an anchor: Discussion and evidence of anchoring effects in contingent valuation," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 35(5), pages 836-853, October.
    4. Paul McNamee & Laura Ternent & Adjima Gbangou & David Newlands, 2010. "A game of two halves? Incentive incompatibility, starting point bias and the bidding game contingent valuation method," Health Economics, John Wiley & Sons, Ltd., vol. 19(1), pages 75-87.
    5. van der Star, Sanne M. & van den Berg, Bernard, 2011. "Individual responsibility and health-risk behaviour: A contingent valuation study from the ex ante societal perspective," Health Policy, Elsevier, vol. 101(3), pages 300-311, August.
    6. Frör, Oliver, 2008. "Bounded rationality in contingent valuation: Empirical evidence using cognitive psychology," Ecological Economics, Elsevier, vol. 68(1-2), pages 570-581, December.
    7. Ahlheim, Michael & Fror, Oliver & Heinke, Antonia & Keil, Alwin & Duc, Nguyen Minh & Dinh, Pham Van & Saint-Macary, Camille & Zeller, Manfred, 2009. "Landslides in Mountainous Regions of Northern Vietnam: Causes, Protection Strategies and the Assessment of Economic Losses," Economics Papers from University Paris Dauphine 123456789/11413, Paris Dauphine University.
    8. Laura J. Damschroder & Peter A. Ubel & Jason Riis & Dylan M. Smith, 2007. "An alternative approach for eliciting willingness-to-pay: A randomized Internet trial," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 2, pages 96-106, April.
    9. Richard D. Smith, 2006. "It's not just what you do, it's the way that you do it: the effect of different payment card formats and survey administration on willingness to pay for health gain," Health Economics, John Wiley & Sons, Ltd., vol. 15(3), pages 281-293.

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