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Cognitive Ability and Scale Bias in the Contingent Valuation Method

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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 constraints 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 Swedish National Road & Transport Research Institute (VTI) in its series Working Papers with number 2006:2.

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Length: 31 pages
Date of creation: 15 May 2006
Date of revision:
Publication status: Published in Environmental and Resource Economics, 2008, pages 481-495.
Handle: RePEc:hhs:vtiwps:2006_002

Note: This paper has been revised and has been replaced by Working Paper 2007:1.
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Postal: VTI, Transport Economics, P.O. Box 6056, SE-171 06 Solna, Sweden
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Web page: http://www.vti.se/tek
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Keywords: Cognitive Ability; Contingent Valuation; Mortality Risk; Near-proportionality; Scale Bias;

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References

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Citations

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Cited by:
  1. Henrik Andersson & James Hammitt & Gunnar Lindberg & Kristian Sundström, 2013. "Willingness to Pay and Sensitivity to Time Framing: A Theoretical Analysis and an Application on Car Safety," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 56(3), pages 437-456, November.
  2. Sund, Björn, 2009. "Sensitivity to scope in contingent valuation – introducing a flexible community analogy to communicate mortality risk reductions," Working Papers 2009:2, Örebro University, School of Business.
  3. Jacob Ladenburg & Søren Bøye Olsen, 2010. "Gender anomalies in Stated Preference surveys – Are biases really gender dependent?," IFRO Working Paper 2010/1, University of Copenhagen, Department of Food and Resource Economics.
  4. Svensson, Mikael & Persson, Mattias, 2012. "The Willingness to Pay to Reduce School Bullying," Karlstad University Working Papers in Economics 3, Department of Economics, Karlstad University.
  5. Andersson, Henrik & Risa Hole, Arne & Svensson, Mikael, 2014. "Valuation of small and multiple health risks: A critical analysis of SP data applied to food and water safety," Karlstad University Working Papers in Economics 11, Department of Economics, Karlstad University.
  6. Marija Bockarjova & Piet Rietveld & Erik T. Verhoef, 2012. "Scale, Scope and Cognition: Context Analysis of Multiple Stated Choice Experiments on the Values of Life and Limb," Tinbergen Institute Discussion Papers 12-046/3, Tinbergen Institute.
  7. Marielle Brunette, 2012. "Do risk communication methods perform to generate rationality?," Working Papers - Cahiers du LEF 2012-01, Laboratoire d'Economie Forestiere, AgroParisTech-INRA.
  8. Hultkrantz, Lars & Svensson, Mikael, 2012. "The value of a statistical life in Sweden: A review of the empirical literature," Health Policy, Elsevier, vol. 108(2), pages 302-310.
  9. Andersson, Henrik & Svensson, Mikael, 2006. "Cognitive Ability and Scale Bias in the Contingent Valuation Method," Working Papers 2006:2, Swedish National Road & Transport Research Institute (VTI).
  10. Thijs Dekker & Roy Brouwer & Marjan Hofkes & Klaus Moeltner, 2011. "The Effect of Risk Context on the Value of a Statistical Life: a Bayesian Meta-model," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 49(4), pages 597-624, August.
  11. Krüger, Niclas A. & Svensson, Mikael, 2009. "The impact of real options on willingness to pay for mortality risk reductions," Journal of Health Economics, Elsevier, vol. 28(3), pages 563-569, May.
  12. Kim, GwanSeon & Petrolia, Daniel R. & Interis, Matthew G., 2012. "A Method for Improving Welfare Estimates from Multiple-Referendum Surveys," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 37(2), August.

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