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Dealing with Internal Inconsistency in Double-Bounded Dichotomous Choice: An Application to Community-Based Health Insurance

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  • Hermann Pythagore Pierre Donfouet

    (CREM, UMR 6211, University of Rennes I, France)

  • Pierre-Alexandre Mahieu

    (LEMNA, University of Nantes, France)

  • P. Wilner Jeanty

    (Kinder Institute for Urban Research, Rice University, Houston, Texas, US)

Abstract

Contingent valuation method is commonly used in the field of health economics in an attempt to help policy maker in taking decisions. The use of the double-bounded dichotomous choice format results in a substantial gain in statistical efficiency over the single bounded dichotomous choice format. Yet, this efficiency gain comes at the cost of biasness known as internal inconsistency. This paper aims at reducing this internal inconsistency in double-bounded dichotomous choice by using the certainty calibration technique in a community-based health insurance study. Findings confirm the internal inconsistency between the initial and the follow-up responses and the statistical efficiency gains of the double-bounded dichotomous choice over the single-bounded dichotomous choice. Furthermore, the use of certainty calibration reduces this internal inconsistent pattern in responses and still maintains efficiency gain. We further discuss the policy implications.

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Bibliographic Info

Paper provided by Center for Research in Economics and Management (CREM), University of Rennes 1, University of Caen and CNRS in its series Economics Working Paper Archive (University of Rennes 1 & University of Caen) with number 201130.

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Date of creation: Dec 2011
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Handle: RePEc:tut:cremwp:201130

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Keywords: Contingent valuation; internal inconsistency; certainty calibration; community-based health insurance;

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  1. John Loomis, 2005. "Valuing Environmental and Natural Resources: The Econometrics of Non-Market Valuation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(2), pages 529-530.
  2. Laura O. Taylor & Ronald G. Cummings, 1999. "Unbiased Value Estimates for Environmental Goods: A Cheap Talk Design for the Contingent Valuation Method," American Economic Review, American Economic Association, vol. 89(3), pages 649-665, June.
  3. Ethier, Robert G. & Poe, Gregory L. & Schulze, William D. & Clark, Jeremy, 1997. "A Comparison Of Hypothetical Phone And Mail Contingent Valuation Responses For Green Pricing Electricity Programs," Working Papers 7245, Cornell University, Department of Applied Economics and Management.
  4. Dale Whittington, 2002. "Improving the Performance of Contingent Valuation Studies in Developing Countries," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 22(1), pages 323-367, June.
  5. Champ, Patricia A. & Bishop, Richard C. & Brown, Thomas C. & McCollum, Daniel W., 1997. "Using Donation Mechanisms to Value Nonuse Benefits from Public Goods," Journal of Environmental Economics and Management, Elsevier, vol. 33(2), pages 151-162, June.
  6. Loomis, John & Ekstrand, Earl, 1998. "Alternative approaches for incorporating respondent uncertainty when estimating willingness to pay: the case of the Mexican spotted owl," Ecological Economics, Elsevier, vol. 27(1), pages 29-41, October.
  7. DeShazo, J. R., 2002. "Designing Transactions without Framing Effects in Iterative Question Formats," Journal of Environmental Economics and Management, Elsevier, vol. 43(3), pages 360-385, May.
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