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Why Value Estimates Generated Using Choice Modelling Exceed Contingent Valuation: Further Experimental Evidence

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  • Boyle, Kevin J.
  • Morrison, Mark
  • Taylor, Laura O.

Abstract

Choice modelling is increasingly being used to generate estimates of the value of changes in environmental quality. This is partly because of the informational efficiencies of the technique, but also because of concern about the accuracy of contingent valuation. Experimental evidence has, however, demonstrated that choice modelling tends to produce much higher valuation estimates than contingent valuation. One possible explanation for the divergence between choice modelling and contingent valuation estimates is the lack of incentive compatibility with the former technique. This potentially has several sources, including having no provision rule (eg a referendum), respondents choosing between more than two alternatives, and repeated choices. We report on the results of a series of experiments involving over 2000 subjects designed to test whether a lack of incentive compatibility is responsible for divergences in value estimates.

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Bibliographic Info

Paper provided by Australian Agricultural and Resource Economics Society in its series 2004 Conference (48th), February 11-13, 2004, Melbourne, Australia with number 58370.

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Date of creation: Feb 2004
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Handle: RePEc:ags:aare04:58370

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Keywords: Research Methods/ Statistical Methods;

References

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  1. David Bjornstad & Ronald Cummings & Laura Osborne, 1997. "A Learning Design for Reducing Hypothetical Bias in the Contingent Valuation Method," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 10(3), pages 207-221, October.
  2. Hoehn, John P. & Randall, Alan, 1987. "A satisfactory benefit cost indicator from contingent valuation," Journal of Environmental Economics and Management, Elsevier, vol. 14(3), pages 226-247, September.
  3. Timothy C. Haab & Ju-Chin Huang & John C. Whitehead, 1999. "Are Hypothetical Referenda Incentive Compatible? A Comment," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 107(1), pages 186-196, February.
  4. 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.
  5. Vivien Foster & Susana Mourato, 2003. "Elicitation Format and Sensitivity to Scope," Environmental & Resource Economics, European Association of Environmental and Resource Economists, European Association of Environmental and Resource Economists, vol. 24(2), pages 141-160, February.
  6. Newell, Laurienne Whinstanley & Swallow, Stephen K., 2002. "Are Stated Preferences Invariant To The Prospect Of Real-Money Choice?," 2002 Annual meeting, July 28-31, Long Beach, CA 19623, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
  7. Kevin J. Boyle & Thomas P. Holmes & Mario F. Teisl & Brian Roe, 2001. "A Comparison of Conjoint Analysis Response Formats," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 83(2), pages 441-454.
  8. Jayson L. Lusk, 2003. "Effects of Cheap Talk on Consumer Willingness-to-Pay for Golden Rice," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 85(4), pages 840-856.
  9. Daniel McFadden & Kenneth Train, 2000. "Mixed MNL models for discrete response," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 15(5), pages 447-470.
  10. Adamowicz, Wiktor L. & Boxall, Peter C. & Williams, Michael & Louviere, Jordan, 1995. "Stated Preference Approaches for Measuring Passive Use Values: Choice Experiments versus Contingent Valuation," Staff Paper Series, University of Alberta, Department of Resource Economics and Environmental Sociology 24126, University of Alberta, Department of Resource Economics and Environmental Sociology.
  11. Carlsson, Fredrik & Martinsson, Peter, 2001. "Do Hypothetical and Actual Marginal Willingness to Pay Differ in Choice Experiments?: Application to the Valuation of the Environment," Journal of Environmental Economics and Management, Elsevier, vol. 41(2), pages 179-192, March.
  12. Cummings, Ronald G, et al, 1997. "Are Hypothetical Referenda Incentive Compatible?," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 105(3), pages 609-21, June.
  13. Stevens, T. H. & Belkner, R. & Dennis, D. & Kittredge, D. & Willis, C., 2000. "Comparison of contingent valuation and conjoint analysis in ecosystem management," Ecological Economics, Elsevier, vol. 32(1), pages 63-74, January.
  14. Timothy Park & John B. Loomis & Michael Creel, 1991. "Confidence Intervals for Evaluating Benefits Estimates from Dichotomous Choice Contingent Valuation Studies," Land Economics, University of Wisconsin Press, vol. 67(1), pages 64-73.
  15. Magat, Wesley A. & Kip Viscusi, W. & Huber, Joel, 1988. "Paired comparison and contingent valuation approaches to morbidity risk valuation," Journal of Environmental Economics and Management, Elsevier, vol. 15(4), pages 395-411, December.
  16. Gregory L. Poe & Kelly L. Giraud & John B. Loomis, 2005. "Computational Methods for Measuring the Difference of Empirical Distributions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, Agricultural and Applied Economics Association, vol. 87(2), pages 353-365.
  17. Blamey, R. K. & Bennett, J. W. & Louviere, J. J. & Morrison, M. D. & Rolfe, J., 2000. "A test of policy labels in environmental choice modelling studies," Ecological Economics, Elsevier, vol. 32(2), pages 269-286, February.
  18. Prince, Raymond & McKee, Michael & Ben-David, Shaul & Bagnoli, Mark, 1992. "Improving the contingent valuation method: Implementing the contribution game," Journal of Environmental Economics and Management, Elsevier, vol. 23(1), pages 78-90, July.
  19. Layton, David F., 2000. "Random Coefficient Models for Stated Preference Surveys," Journal of Environmental Economics and Management, Elsevier, vol. 40(1), pages 21-36, July.
  20. Nick Hanley & Douglas MacMillan & Robert E. Wright & Craig Bullock & Ian Simpson & Dave Parsisson & Bob Crabtree, 1998. "Contingent Valuation Versus Choice Experiments: Estimating the Benefits of Environmentally Sensitive Areas in Scotland," Journal of Agricultural Economics, Wiley Blackwell, vol. 49(1), pages 1-15.
  21. Boxall, Peter C. & Adamowicz, Wiktor L. & Swait, Joffre & Williams, Michael & Louviere, Jordan, 1996. "A comparison of stated preference methods for environmental valuation," Ecological Economics, Elsevier, vol. 18(3), pages 243-253, September.
  22. Cummings, Ronald G & Harrison, Glenn W & Rutstrom, E Elisabet, 1995. "Homegrown Values and Hypothetical Surveys: Is the Dichotomous Choice Approach Incentive-Compatible?," American Economic Review, American Economic Association, vol. 85(1), pages 260-66, March.
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Cited by:
  1. McNair, Ben J. & Bennett, Jeff & Hensher, David A., 2010. "A comparison of responses to single and repeated discrete choice questions," MPRA Paper 23163, University Library of Munich, Germany.

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