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Sensitivity to scope in contingent valuation – introducing a flexible community analogy to communicate mortality risk reductions

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Author Info
Sund, Björn () (Department of Business, Economics, Statistics and Informatics)
Abstract

Validity in contingent valuation (CV) is often tested through the sensitivity of estimated willingness to pay (WTP) to the size or quality of a good or service (‘more is better’ and near proportionality). We investigate the performance of two communication aids (a flexible community analogy and an array of dots) in valuing mortality risk reductions for out-of-hospital cardiac arrest. Our results do not support the prediction of expected utility theory, i.e. that WTP for a mortality risk reduction increases with the amount of risk reduction (weak scope sensitivity), for any of the communication aids. In fact, the array of dots even shows a decreasing WTP when the risk reduction is larger. We find some evidence that level of education influences how communication aids are perceived. Also, a larger municipal population results in lower WTP which may signal problems with strategic bias.

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Paper provided by Örebro University, Swedish Business School in its series Working Papers with number 2009:2.

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Length: 36 pages
Date of creation: 03 Feb 2009
Date of revision:
Handle: RePEc:hhs:oruesi:2009_002

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Postal: Örebro University, Swedish Business School, SE - 701 82 ÖREBRO, Sweden
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Fax: 019-33 25 46
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Related research
Keywords: Contingent valuation; Willingness to pay; Validity; Sensitivity to scope; Risk communication; Community analogy; Cardiac arrest;

Find related papers by JEL classification:
D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health

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