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Correcting for the endogeneity of pro-environment behavioral choices in contingent valuation

  • Martínez-Espiñeira, Roberto
  • Lyssenko, Nikita

In contingent valuation studies, observed behavioral choices often enter as independent variables in the willingness to pay function. However, these variables may be endogenously determined when the error term in the behavioral model is correlated with the error term in the willingness to pay model. We investigate the effects of correcting for the endogeneity of a variable, namely membership status in environmental organizations that proxies unobservable characteristics of the respondents. Jointly modeling the membership variable and the willingness to pay response yields an estimate for the effect of the former that contradicts previous findings but is intuitive and agrees with theoretical expectations.

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Article provided by Elsevier in its journal Ecological Economics.

Volume (Year): 70 (2011)
Issue (Month): 8 (June)
Pages: 1435-1439

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Handle: RePEc:eee:ecolec:v:70:y:2011:i:8:p:1435-1439
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  17. Berrens, Robert P. & Jenkins-Smith, Hank & Bohara, Alok K. & Silva, Carol L., 2002. "Further Investigation of Voluntary Contribution Contingent Valuation: Fair Share, Time of Contribution, and Respondent Uncertainty," Journal of Environmental Economics and Management, Elsevier, vol. 44(1), pages 144-168, July.
  18. Kotchen, Matthew J. & Reiling, Stephen D., 2000. "Environmental attitudes, motivations, and contingent valuation of nonuse values: a case study involving endangered species," Ecological Economics, Elsevier, vol. 32(1), pages 93-107, January.
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