IDEAS home Printed from https://ideas.repec.org/a/eee/ecolec/v128y2016icp17-22.html
   My bibliography  Save this article

Plausible responsiveness to scope in contingent valuation

Author

Listed:
  • Whitehead, John C.

Abstract

Plausible responsiveness to scope is a question of economic significance, in addition to statistical significance, of the scope test in contingent valuation. We briefly review the history of the scope test in order to place the current issue in the context of the BP Deepwater Horizon oil spill. As a result of the review we gain insights into how the issue of scope “adequacy” arose twenty years after it was first mentioned by the NOAA Panel on Contingent Valuation following the Exxon Valdez oil spill. We then provide a review of Desvousges, Mathews and Train (2012) who promote the adding-up test to identify inadequate responsiveness to scope adequacy. The adding-up test is a test of the construct validity of the contingent valuation method but is flawed as a measure of economic significance. We propose scope elasticity of willingness-to-pay as a measure of economic significance. A simulation suggests a likely range of elasticity estimates given linear and quadratic functional forms for the willingness-to-pay function. In order to illustrate the ease of implementation of scope elasticity within the context of the standard scope test we calculate scope elasticity with willingness-to-pay estimates from several studies, describe two studies that directly estimate scope elasticity and estimate scope elasticity with primary data from two studies. All of these empirical estimates of scope elasticity fall within the range of scope elasticity suggested by the simulation. Scope elasticity provides a practical way forward, relative to the adding up test, on the issue of economic significance of scope effects.

Suggested Citation

  • Whitehead, John C., 2016. "Plausible responsiveness to scope in contingent valuation," Ecological Economics, Elsevier, vol. 128(C), pages 17-22.
  • Handle: RePEc:eee:ecolec:v:128:y:2016:i:c:p:17-22
    DOI: 10.1016/j.ecolecon.2016.03.011
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0921800916302890
    Download Restriction: Full text for ScienceDirect subscribers only

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Deirdre N. McCloskey & Stephen T. Ziliak, 1996. "The Standard Error of Regressions," Journal of Economic Literature, American Economic Association, vol. 34(1), pages 97-114, March.
    2. Trudy Ann Cameron, 1991. "Interval Estimates of Non-Market Resource Values from Referendum Contingent Valuation Surveys," Land Economics, University of Wisconsin Press, vol. 67(4), pages 413-421.
    3. anonymous, 1986. "Proposed changes to official staff commentary," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Feb, pages 134-134.
    4. Boyle Kevin J. & Desvousges William H. & Johnson F. Reed & Dunford Richard W. & Hudson Sara P., 1994. "An Investigation of Part-Whole Biases in Contingent-Valuation Studies," Journal of Environmental Economics and Management, Elsevier, vol. 27(1), pages 64-83, July.
    5. Catherine L. Kling & Daniel J. Phaneuf & Jinhua Zhao, 2012. "From Exxon to BP: Has Some Number Become Better Than No Number?," Journal of Economic Perspectives, American Economic Association, vol. 26(4), pages 3-26, Fall.
    6. H. Spencer Banzhaf & Dallas Burtraw & David Evans & Alan Krupnick, 2006. "Valuation of Natural Resource Improvements in the Adirondacks," Land Economics, University of Wisconsin Press, vol. 82(3), pages 445-464.
    7. Cameron, Trudy Ann & James, Michelle D, 1987. "Efficient Estimation Methods for "Closed-ended' Contingent Valuation Surveys," The Review of Economics and Statistics, MIT Press, vol. 69(2), pages 269-276, May.
    8. William Desvousges & Kristy Mathews & Kenneth Train, 2017. "An adding-up test on contingent valuations of river and lake quality," Chapters, in: Daniel McFadden & Kenneth Train (ed.),Contingent Valuation of Environmental Goods, chapter 4, pages 58-81, Edward Elgar Publishing.
    9. Richard T. Carson & Robert Cameron Mitchell, 1993. "The Issue of Scope in Contingent Valuation Studies," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(5), pages 1263-1267.
    10. Heberlein, Thomas A. & Wilson, Matthew A. & Bishop, Richard C. & Schaeffer, Nora Cate, 2005. "Rethinking the scope test as a criterion for validity in contingent valuation," Journal of Environmental Economics and Management, Elsevier, vol. 50(1), pages 1-22, July.
    11. anonymous, 1986. "Comment period extended on proposed amendments," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Sep, pages 644-644.
    12. Alberto Longo & David Hoyos & Anil Markandya, 2015. "Sequence Effects in the Valuation of Multiple Environmental Programs Using the Contingent Valuation Method," Land Economics, University of Wisconsin Press, vol. 91(1), pages 20-35.
    13. Kahneman, Daniel & Knetsch, Jack L., 1992. "Valuing public goods: The purchase of moral satisfaction," Journal of Environmental Economics and Management, Elsevier, vol. 22(1), pages 57-70, January.
    14. Rollins, Kimberly & Lyke, Audrey, 1998. "The Case for Diminishing Marginal Existence Values," Journal of Environmental Economics and Management, Elsevier, vol. 36(3), pages 324-344, November.
    15. Peter A. Diamond & Jerry A. Hausman, 1994. "Contingent Valuation: Is Some Number Better than No Number?," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 45-64, Fall.
    16. Daniel McFadden, 1994. "Contingent Valuation and Social Choice," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(4), pages 689-708.
    17. W. Michael Hanemann, 1994. "Valuing the Environment through Contingent Valuation," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 19-43, Fall.
    18. Diamond, Peter, 1996. "Testing the Internal Consistency of Contingent Valuation Surveys," Journal of Environmental Economics and Management, Elsevier, vol. 30(3), pages 337-347, May.
    19. John C. Whitehead & Timothy C. Haab & Ju-Chin Huang, 1998. "Part-Whole Bias in Contingent Valuation: Will Scope Effects Be Detected with Inexpensive Survey Methods?," Southern Economic Journal, Southern Economic Association, vol. 65(1), pages 160-168, July.
    20. Whitehead, John C. & Cherry, Todd L., 2007. "Willingness to pay for a Green Energy program: A comparison of ex-ante and ex-post hypothetical bias mitigation approaches," Resource and Energy Economics, Elsevier, vol. 29(4), pages 247-261, November.
    21. Richard T. Carson, 2012. "Contingent Valuation: A Practical Alternative When Prices Aren't Available," Journal of Economic Perspectives, American Economic Association, vol. 26(4), pages 27-42, Fall.
    22. Randall, Alan, 1998. "Beyond the crucial experiment: mapping the performance characteristics of contingent valuation," Resource and Energy Economics, Elsevier, vol. 20(2), pages 197-206, June.
    23. Timothy C. Haab & Matthew G. Interis & Daniel R. Petrolia & John C. Whitehead, 2013. "From Hopeless to Curious? Thoughts on Hausman's "Dubious to Hopeless" Critique of Contingent Valuation," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 35(4), pages 593-612.
    24. William Desvousges & Kristy Mathews & Kenneth Train, 2016. "From Curious to Pragmatically Curious: Comment on "From Hopeless to Curious? Thoughts on Hausman's "Dubious to Hopeless" Critique of Contingent Valuation"," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 38(1), pages 174-182.
    25. V. Kerry Smith, 1999. "Of Birds and Books: More on Hypothetical Referenda," Journal of Political Economy, University of Chicago Press, vol. 107(1), pages 197-200, February.
    26. Bateman, Ian J, et al, 1997. "Does Part-Whole Bias Exist? An Experimental Investigation," Economic Journal, Royal Economic Society, vol. 107(441), pages 322-332, March.
    27. Jerry Hausman, 2012. "Contingent Valuation: From Dubious to Hopeless," Journal of Economic Perspectives, American Economic Association, vol. 26(4), pages 43-56, Fall.
    28. Julia Martin-Ortega & M. Azahara Mesa-Jurado & Julio Berbel, 2015. "Revisiting the Impact of Order Effects on Sensitivity to Scope: A Contingent Valuation of a Common-Pool Resource," Journal of Agricultural Economics, Wiley Blackwell, vol. 66(3), pages 705-726, September.
    29. Paul R. Portney, 1994. "The Contingent Valuation Debate: Why Economists Should Care," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 3-17, Fall.
    30. Carson Richard T. & Mitchell Robert Cameron, 1995. "Sequencing and Nesting in Contingent Valuation Surveys," Journal of Environmental Economics and Management, Elsevier, vol. 28(2), pages 155-173, March.
    31. anonymous, 1986. "Extension of period for comment," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Mar, pages 194-194.
    32. Timothy C. Haab & Matthew G. Interis & Daniel R. Petrolia & John C. Whitehead, 2016. "Interesting Questions Worthy of Further Study: Our Reply to Desvousges, Mathews, and Train's (2015) Comment on Our Thoughts (2013) on Hausman's (2012) Update of Diamond and Hausman's (1994) Critique o," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 38(1), pages 183-189.
    33. Carson, R.T. & Mitchell, R.C. & Hanemann, W.M. & Kopp, R.J. & Presser, S. & Ruud, P.A., 1992. "A Contingent Valuation Study of Lost Passive Use Values Resulting From the Exxon Valdez Oil Spill," MPRA Paper 6984, University Library of Munich, Germany.
    34. Smith, V. Kerry, 1992. "Arbitrary values, good causes, and premature verdicts," Journal of Environmental Economics and Management, Elsevier, vol. 22(1), pages 71-89, January.
    35. Henrik Lindhjem & Kristine Grimsrud & Ståle Navrud & Stein Olav Kolle, 2015. "The social benefits and costs of preserving forest biodiversity and ecosystem services," Journal of Environmental Economics and Policy, Taylor & Francis Journals, vol. 4(2), pages 202-222, July.
    36. Elbakidze, Levan & Nayga, Rodolfo, 2015. "Validating consistency of non-hypothetical experimental auction data: application of the adding-up test in a multi-unit setting," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205403, Agricultural and Applied Economics Association.
    37. Desvousges, William & Mathews, Kristy & Train, Kenneth, 2012. "Adequate responsiveness to scope in contingent valuation," Ecological Economics, Elsevier, vol. 84(C), pages 121-128.
    38. Amiran, Edoh Y. & Hagen, Daniel A., 2010. "The scope trials: Variation in sensitivity to scope and WTP with directionally bounded utility functions," Journal of Environmental Economics and Management, Elsevier, vol. 59(3), pages 293-301, May.
    39. Richardson, Leslie & Loomis, John, 2009. "The total economic value of threatened, endangered and rare species: An updated meta-analysis," Ecological Economics, Elsevier, vol. 68(5), pages 1535-1548, March.
    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. Catherine L. Kling & Daniel J. Phaneuf, 2018. "How are Scope and Adding up Relevant for Benefits Transfer?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 69(3), pages 483-502, March.
    2. Klaus Glenk & Robert J. Johnston & Jürgen Meyerhoff & Julian Sagebiel, 2020. "Spatial Dimensions of Stated Preference Valuation in Environmental and Resource Economics: Methods, Trends and Challenges," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 75(2), pages 215-242, February.
    3. Moeltner, Klaus, 2019. "Bayesian nonlinear meta regression for benefit transfer," Journal of Environmental Economics and Management, Elsevier, vol. 93(C), pages 44-62.
    4. Lim, Seul-Ye & Kim, Hyo-Jin & Yoo, Seung-Hoon, 2018. "Household willingness to pay for expanding fuel cell power generation in Korea: A view from CO2 emissions reduction," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P1), pages 242-249.
    5. Peter A. Groothuis & Tanga A. Mohr & John C. Whitehead & Kristan A. Cockerill & William P. Anderson, Jr. & Chuanhui Gu, "undated". "The Influence of Scientific Information on the Willingness to Pay for Stormwater Runoff Abatement," Working Papers 17-05, Department of Economics, Appalachian State University.
    6. Ho-Young Kim & So-Yeon Park & Seung-Hoon Yoo, 2016. "Public Acceptability of Introducing a Biogas Mandate in Korea: A Contingent Valuation Study," Sustainability, MDPI, Open Access Journal, vol. 8(11), pages 1-16, October.
    7. Balmford, Ben & Bateman, Ian J. & Bolt, Katherine & Day, Brett & Ferrini, Silvia, 2019. "The value of statistical life for adults and children: Comparisons of the contingent valuation and chained approaches," Resource and Energy Economics, Elsevier, vol. 57(C), pages 68-84.
    8. Skeie, Magnus Aa. & Lindhjem, Henrik & Skjeflo, Sofie & Navrud, Ståle, 2019. "Smartphone and tablet effects in contingent valuation web surveys – No reason to worry?," Ecological Economics, Elsevier, vol. 165(C), pages 1-1.
    9. Alaya Spencer‐Cotton & Marit E. Kragt & Michael Burton, 2018. "Spatial and Scope Effects: Valuations of Coastal Management Practices," Journal of Agricultural Economics, Wiley Blackwell, vol. 69(3), pages 833-851, September.
    10. Bishop, Richard C., 2018. "Warm Glow, Good Feelings, and Contingent Valuation," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 43(3), September.
    11. Koto, Prosper Senyo & Yiridoe, Emmanuel K., 2019. "Expected willingness to pay for wind energy in Atlantic Canada," Energy Policy, Elsevier, vol. 129(C), pages 80-88.
    12. Qiang Wang & Thomas Dogot & Guosheng Wu & Xianlei Huang & Changbin Yin, 2019. "Residents’ Willingness for Centralized Biogas Production in Hebei and Shandong Provinces," Sustainability, MDPI, Open Access Journal, vol. 11(24), pages 1-16, December.
    13. John C. Whitehead, 2016. "A Comment on “An Adding Up Test on Contingent Valuations of River and Lake Quality”," Working Papers 17-01, Department of Economics, Appalachian State University.

    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:eee:ecolec:v:128:y:2016:i:c:p:17-22. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Haili He). General contact details of provider: http://www.elsevier.com/locate/ecolecon .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.