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Dichotomous choice contingent valuation probability distributions

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  • Kerr, Geoffrey N.

Abstract

Parametric distributions applied to dichotomous choice contingent valuation data invoke assumptions about the distribution of willingness to pay that may contravene economic theory. This article develops and applies distributions that allow the shape of bid distributions to vary. Alternative distributions provide little, if any, improvement in statistical fit from commonly used distributions. While median willingness to pay is largely invariant to distribution, estimates of mean consumer surplus diverge widely. Sensitivity analysis to determine benefit measure response to distributional assumptions is essential to prevent erroneous policy advice from applied dichotomous choice research.

Suggested Citation

  • Kerr, Geoffrey N., 2000. "Dichotomous choice contingent valuation probability distributions," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 44(2), June.
  • Handle: RePEc:ags:aareaj:117836
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    References listed on IDEAS

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    7. Bengt Kristrom, 1990. "A Non-Parametric Approach to the Estimation of Welfare Measures in Discrete Response Valuation Studies," Land Economics, University of Wisconsin Press, vol. 66(2), pages 135-139.
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    Cited by:

    1. Greiner, Romy & Rolfe, John, 2003. "Estimating consumer surplus and elasticity of demand of tourist visitation to a region in North Queensland using contingent valuation," 2003 Conference (47th), February 12-14, 2003, Fremantle, Australia 57881, Australian Agricultural and Resource Economics Society.
    2. Jeff Bennett, 2005. "Australasian environmental economics: contributions, conflicts and 'cop-outs' ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 49(3), pages 243-261, September.
    3. Norbert Brunner & Vijay Mishra & Ponnusamy Sakthivel & Markus Starkl & Christof Tschohl, 2015. "The Human Right to Water in Law and Implementation," Laws, MDPI, Open Access Journal, vol. 4(3), pages 1-59, August.
    4. Brett Day, 2007. "Distribution-free estimation with interval-censored contingent valuation data: troubles with Turnbull?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(4), pages 777-795, August.
    5. Lee, Chul-Yong & Heo, Hyejin, 2016. "Estimating willingness to pay for renewable energy in South Korea using the contingent valuation method," Energy Policy, Elsevier, vol. 94(C), pages 150-156.
    6. Chin-Huang Huang & Chiung-Hsia Wang, 2015. "Estimating the Total Economic Value of Cultivated Flower Land in Taiwan," Sustainability, MDPI, Open Access Journal, vol. 7(4), pages 1-19, April.
    7. Vesely, Eva-Terezia, 2007. "Green for green: The perceived value of a quantitative change in the urban tree estate of New Zealand," Ecological Economics, Elsevier, vol. 63(2-3), pages 605-615, August.
    8. repec:spr:envpol:v:20:y:2018:i:1:d:10.1007_s10018-017-0191-8 is not listed on IDEAS

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