IDEAS home Printed from https://ideas.repec.org/p/mcm/deptwp/2001-02.html
   My bibliography  Save this paper

Inferring Willingness-to-Pay for Health Attributes of Air Quality Using Information on ranking of Alternatives and Cognitive Ability of Respondents

Author

Listed:
  • R.A. Muller
  • A.L. Robb
  • A. Diener

Abstract

We investigate the use of variable scale parameters to account for heterogeneity in responses to a stated preference survey of willingness to pay for air quality. The survey instrument collected full rankings of four alternatives in each of nine choice sets. Nine of 54 pairwise comparisons involved dominated alternatives; selection of a dominated alternative is interpreted as indicating cognitive difficulties. We allow the scale parameter in a conditional logit model to vary by the ranking considered (first, second or third choice) and by the degree of cognitive difficulty encountered. We investigate the effect of this on the magnitude and precision of estimated willingness-to-pay using empirically-based confidence intervals. The size of the scale parameter is significantly and positively related to the frequency with which respondents chose dominated choices, even after corrections designed to eliminate endogeneity bias. Ignoring heterogeneity in the cognitive ability of respondents biases willingness-to-pay estimates upwards. Consideration of second and third choices narrows the confidence intervals on WTP estimates. Introducing a variable scale parameter related to ranking by itself does not improve the precision of the estimate. Sample STATA code is provided.

Suggested Citation

  • R.A. Muller & A.L. Robb & A. Diener, 2001. "Inferring Willingness-to-Pay for Health Attributes of Air Quality Using Information on ranking of Alternatives and Cognitive Ability of Respondents," Department of Economics Working Papers 2001-02, McMaster University.
    • Handle: RePEc:mcm:deptwp:2001-02
    as

    Download full text from publisher

    File URL: http://socserv.mcmaster.ca/econ/rsrch/papers/archive/2001-02.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Hensher, David & Louviere, Jordan & Swait, Joffre, 1998. "Combining sources of preference data," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 197-221, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mariel, Petr & Khan, Mohammad Asif & Meyerhoff, Jürgen, 2022. "Valuing individuals’ preferences for air quality improvement: Evidence from a discrete choice experiment in South Delhi," Economic Analysis and Policy, Elsevier, vol. 74(C), pages 432-447.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tin Cheuk Leung, 2013. "What Is the True Loss Due to Piracy? Evidence from Microsoft Office in Hong Kong," The Review of Economics and Statistics, MIT Press, vol. 95(3), pages 1018-1029, July.
    2. Villas-Boas, Sofia B, 2020. "Reduced Form Evidence on Belief Updating Under Asymmetric Information," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt08c456vk, Department of Agricultural & Resource Economics, UC Berkeley.
    3. Daniel McFadden, 2001. "Economic Choices," American Economic Review, American Economic Association, vol. 91(3), pages 351-378, June.
    4. Liu, Gang, 2007. "A behavioral model of work-trip mode choice in Shanghai," China Economic Review, Elsevier, vol. 18(4), pages 456-476.
    5. Richard Carson & Nicholas Flores & Norman Meade, 2001. "Contingent Valuation: Controversies and Evidence," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 19(2), pages 173-210, June.
    6. Erik Meijer & Jan Rouwendal, 2006. "Measuring welfare effects in models with random coefficients," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(2), pages 227-244, March.
    7. Pamela Giustinelli, 2016. "Group Decision Making With Uncertain Outcomes: Unpacking Child–Parent Choice Of The High School Track," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 57(2), pages 573-602, May.
    8. Richard T. Carson, 2011. "Contingent Valuation," Books, Edward Elgar Publishing, number 2489.
    9. Kettlewell, Nathan & Walker, Matthew J. & Yoo, Hong Il, 2024. "Alternative Models of Preference Heterogeneity for Elicited Choice Probabilities," IZA Discussion Papers 16821, Institute of Labor Economics (IZA).
    10. Lauren Chenarides & Carola Grebitus & Jayson L Lusk & Iryna Printezis, 2022. "A calibrated choice experiment method," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 49(5), pages 971-1004.
    11. David Hensher, 2001. "The valuation of commuter travel time savings for car drivers: evaluating alternative model specifications," Transportation, Springer, vol. 28(2), pages 101-118, May.
    12. James J. Heckman, 2008. "Econometric Causality," International Statistical Review, International Statistical Institute, vol. 76(1), pages 1-27, April.
    13. Bursa, Bartosz & Mailer, Markus & Axhausen, Kay W., 2022. "Travel behavior on vacation: transport mode choice of tourists at destinations," Transportation Research Part A: Policy and Practice, Elsevier, vol. 166(C), pages 234-261.
    14. Andersson, Henrik & Hole, Arne Risa & Svensson, Mikael, 2016. "Valuation of small and multiple health risks: A critical analysis of SP data applied to food and water safety," Journal of Environmental Economics and Management, Elsevier, vol. 75(C), pages 41-53.
    15. Shr, Yau-Huo & Ready, Richard C. & Orland, Brian & Echols, Stuart, 2017. "Do Visual Representations Influence Survey Responses? Evidence from a Choice Experiment on Landscape Attributes of Green Infrastructure," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258397, Agricultural and Applied Economics Association.
    16. Shenhao Wang & Qingyi Wang & Jinhua Zhao, 2019. "Multitask Learning Deep Neural Networks to Combine Revealed and Stated Preference Data," Papers 1901.00227, arXiv.org, revised Aug 2019.
    17. Jasper Willigers & Han Floor & Bert Van Wee, 2005. "High-speed railÂ’s impact on the location of office employment within the Dutch Randstad area," ERSA conference papers ersa05p308, European Regional Science Association.
    18. Yanhong H. Jin & James W. Mjelde & Kerry K. Litzenberg, 2014. "Economic analysis of job-related attributes in undergraduate students' initial job selection," Education Economics, Taylor & Francis Journals, vol. 22(3), pages 305-327, June.
    19. Siikamaki, Juha & Layton, David F., 2001. "Logit Models For Pooled Contingent Valuation And Contingent Rating And Ranking Data: Valuing Benefits From Forest Biodiversity Conservation," 2001 Annual meeting, August 5-8, Chicago, IL 20616, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    20. Neustadt, Ilja & Zweifel, Peter, 2010. "Is the Welfare State Sustainable? Experimental Evidence on Citizens' Preferences for Redistribution," MPRA Paper 22233, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • I10 - Health, Education, and Welfare - - Health - - - General
    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mcm:deptwp:2001-02. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/demcmca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.