What Are the Consequences of Consequentiality?
AbstractWe offer an empirical test of a theoretical result in the contingent valuation literature. Specifically, it has been argued from a theoretical point of view that survey participants who perceive a survey to be ``consequential'' will respond to questions truthfully regardless of the degree of perceived consequentiality. Using survey data from the Iowa Lakes Project, we test this supposition. Specifically, we employ a Bayesian treatment effect model in which the degree of perceived consequentiality, measured as an ordinal response, is permitted to have a structural impact on willingness to pay (WTP) for a hypothetical environmental improvement. We test the theory by determining if the WTP distributions are the same for each value of the ordinal response. In our survey data, a subsample of individuals were randomly assigned supporting information suggesting that their responses to the questionnaires were important and will have an impact on policy decisions. In conjunction with a Bayesian posterior simulator, we use this source of exogenous variation to identify the structural impacts of consequentiality perceptions on willingness to pay, while controlling for the potential of confounding on unobservables. We find evidence consistent with the ``knife-edge'' theoretical results, namely that the willingness to pay distributions are equal among those believing the survey to be at least minimally consequential, and different for those believing that the survey is irrelevant for policy purposes.
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Bibliographic InfoPaper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 13034.
Date of creation: 05 Mar 2009
Date of revision:
Publication status: Published in Journal of Environmental Economics and Management 2010, vol. 59 no. 1, pp. 67-81
Contact details of provider:
Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
Web page: http://www.econ.iastate.edu
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Other versions of this item:
- Q00 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - General
This paper has been announced in the following NEP Reports:
- NEP-AGR-2010-04-24 (Agricultural Economics)
- NEP-ALL-2010-04-24 (All new papers)
- NEP-EXP-2010-04-24 (Experimental Economics)
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- Erwin Bulte & Shelby Gerking & John List & Aart de Zeeuw, 2004.
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- Bulte, E.H. & Gerking, S.D. & List, J.A. & Zeeuw, A.J. de, 2005. "The effect of varying the causes of environmental problems on stated values: Evidence from a field study," Open Access publications from Tilburg University urn:nbn:nl:ui:12-167602, Tilburg University.
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- Kai, Li, 1998. "Bayesian inference in a simultaneous equation model with limited dependent variables," Journal of Econometrics, Elsevier, vol. 85(2), pages 387-400, August.
- Herriges, Joseph & Kling, Catherine & Liu, Chih-Chen & Tobias, Justin, 2010.
"What are the consequences of consequentiality?,"
Journal of Environmental Economics and Management,
Elsevier, vol. 59(1), pages 67-81, January.
RePEc Biblio mentionsAs found on the RePEc Biblio, the curated bibliography for Economics:
- > Environmental and Natural Resource Economics > Environmental Economics > Valuation > Contingent valuation method > Hypothetical bias
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