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Cognitive Ability and Scale Bias in the Contingent Valuation Method - An Analysis of Willingness to Pay to Reduce Mortality Risks

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Author Info

  • Svensson, Mikael

    ()
    (Department of Business, Economics, Statistics and Informatics)

  • Andersson, Henrik

    ()
    (Department of Transport Economics)

Abstract

This study investigates whether or not the scale bias found in contingent valuation (CVM) studies on mortality risk reductions is a result of cognitive restraints among respondents. Scale bias refers to insensitivity and non near-proportionality of the respondents' willingness to pay (WTP) to the size of the risk reduction. Two hundred Swedish students participated in an experiment where their cognitive ability was tested before they took part in a CVM-study where they were asked about their WTP to reduce bus-mortality risk. The results imply that WTP answers from respondents with a higher cognitive ability are less flawed by scale bias.

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Bibliographic Info

Paper provided by Örebro University, School of Business in its series Working Papers with number 2006:7.

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Length: 28 pages
Date of creation: 26 Oct 2006
Date of revision: 12 Feb 2007
Publication status: Published in Environmental and Resource Economics, 2006, pages 481-495.
Handle: RePEc:hhs:oruesi:2006_007

Contact details of provider:
Postal: Örebro University School of Business, SE - 701 82 ÖREBRO, Sweden
Phone: 019-30 30 00
Fax: 019-33 25 46
Web page: http://www.oru.se/Institutioner/Handelshogskolan-vid-Orebro-universitet/
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Related research

Keywords: Cognitive Ability; Contingent Valuation; Mortality Risk; Near-Proportionality; Scale Bias;

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