Broberg, Thomas () (Department of Economics, Umeå University)
Abstract
In this paper we analyze the multiple-bounded (MB) format in which uncertainty is directly incorporated into the WTP question. We introduce a new approach to estimate mean and median willingness to pay (WTP) using MB data by allowing respondents to expand their WTP intervals by shifting their upper bound. Thus, less certain respondents will state a wider WTP interval. This differs from the Welsh and Poe (1998) approach (WP) which shifts the entire WTP interval and likely overestimates mean and median WTP when uncertainty is introduced. To compare empirically our expansion approach to the WP-approach, we use survey data from 2004 that elicited WTP for implementation of a predator protection policy in Sweden. In addition to its more intuitive appeal, our results indicate that the interval expansion approach better fits the data and provides a smaller range of estimated WTP. It also with better precision estimates the mean and median WTP when preference uncertainty is considered, and its estimates are less sensitive to alternative distributional assumptions.
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Publisher Info
Paper provided by Umeå University, Department of Economics in its series Umeå Economic Studies with number
714.
Length: 20 pages Date of creation: 07 Jun 2007 Date of revision: Handle: RePEc:hhs:umnees:0714
Contact details of provider: Postal: Department of Economics, Umeå University, S-901 87 Umeå, Sweden Phone: 090 - 786 61 42 Fax: 090 - 77 23 02 Email: Web page: http://www.econ.umu.se/ More information through EDIRC
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Find related papers by JEL classification: C81 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Microeconomic Data Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources Q28 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Government Policy
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