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The Use of Hypothetical Baselines in Stated Preference Surveys

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  • Dale Whittington

    ()
    (Department of Environmental Sciences & Engineering, Rosenau CB#7631, School of Public Health, University of North Carolina at Chapel Hill, Chapel Hill, North Carolina 27599, USA, and the Manchester Business School, UK)

  • Vic Adamowicz

    ()
    (Department of Rural Economy, University of Alberta, Edmonton, Canada)

Abstract

Researchers using stated preference (SP) techniques have increasingly come to rely on what we call ?hypothetical baselines.? By the term ?hypothetical baseline,? we mean that respondents are provided with a description of a current state or baseline, but that this baseline is intentionally not the actual state of environmental quality, health or other baseline condition. Respondents are asked to disregard their existing status quo conditions for a new baseline. The SP researcher then poses a valuation question or choice task that is contingent not on the existing status quo state of the world, but rather the state of the world described in this new hypothetical baseline. In this paper we argue that SP researchers have often used hypothetical baselines without carefully considering the cognitive challenges this poses for respondents or the difficulties this practice creates for advising policy makers. We discuss the implications of hypothetical baselines on valuation and policy analysis, using arguments from the behavioral economics literature as well as from standard theory.

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Paper provided by Economy and Environment Program for Southeast Asia (EEPSEA) in its series EEPSEA Special and Technical Paper with number sp201009s1.

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Date of creation: Sep 2010
Date of revision: Sep 2010
Handle: RePEc:eep:tpaper:sp201009s1

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Keywords: stated preference survey;

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  1. Stefano DellaVigna, 2007. "Psychology and Economics: Evidence from the Field," NBER Working Papers 13420, National Bureau of Economic Research, Inc.
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  8. Boxall, Peter & Adamowicz, W.L. & Moon, Amanda, 2009. "Complexity in choice experiments: choice of the status quo alternative and implications for welfare measurement," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 53(4), December.
  9. Richard Carson & Robert Mitchell & Michael Hanemann & Raymond Kopp & Stanley Presser & Paul Ruud, 2003. "Contingent Valuation and Lost Passive Use: Damages from the Exxon Valdez Oil Spill," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 25(3), pages 257-286, July.
  10. Amos Tversky & Daniel Kahneman, 1979. "Prospect Theory: An Analysis of Decision under Risk," Levine's Working Paper Archive 7656, David K. Levine.
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  12. 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 24126, University of Alberta, Department of Resource Economics and Environmental Sociology.
  13. Stephane Hess & John Rose, 2009. "Should Reference Alternatives in Pivot Design SC Surveys be Treated Differently?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 42(3), pages 297-317, March.
  14. Peter Boxall & W. L. (Vic) Adamowicz & Amanda Moon, 2009. "Complexity in choice experiments: choice of the status quo alternative and implications for welfare measurement ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 53(4), pages 503-519, October.
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  17. Dale Whittington, 2004. "Ethical Issues with Contingent Valuation Surveys in Developing Countries: A Note on Informed Consent and Other Concerns," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 28(4), pages 507-515, August.
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