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An alternative interpretation of multiple bounded WTP data--Certainty dependent payment card intervals

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  • Broberg, Thomas
  • Brännlund, Runar

Abstract

This paper analyzes the multiple bounded format, in which uncertainty is directly incorporated into the WTP question. A new approach for analyzing multiple bounded uncertainty data is presented. The intuition underlying the approach is that uncertain individuals would like to state their WTP as intervals rather than precise values and that the width of the intervals is determined by the degree of uncertainty. The approach is compared to the one applied in Welsh and Poe [Welsh, M., Poe, G.L., 1998. Elicitation effects in contingent valuation: comparisons to a multiple bounded discrete choice approach. Journal of Environmental Economics and Management 36, 170-185] which treats uncertainty by conditioning responses on specific verbal probability statements. We argue that the conditioning approach overestimates mean and median WTP and that conditioning WTP estimates on probability statements like "probably" and "unsure" make them "fuzzy". To empirically compare the two approaches we use data from 2004 concerning implementation of a predator protection policy in Sweden. Our analysis show that the suggested approach: (1) is more intuitive; (2) better fits the data; (3) estimates mean and median WTP with better precision; (4) is less sensitive to distributional assumptions; and (5) it is better suited for policy analysis.

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  • Broberg, Thomas & Brännlund, Runar, 2008. "An alternative interpretation of multiple bounded WTP data--Certainty dependent payment card intervals," Resource and Energy Economics, Elsevier, vol. 30(4), pages 555-567, December.
  • Handle: RePEc:eee:resene:v:30:y:2008:i:4:p:555-567
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    References listed on IDEAS

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    1. repec:eee:touman:v:64:y:2018:i:c:p:37-54 is not listed on IDEAS
    2. Voltaire, Louinord & Pirrone, Claudio & Bailly, Denis, 2013. "Dealing with preference uncertainty in contingent willingness to pay for a nature protection program: A new approach," Ecological Economics, Elsevier, vol. 88(C), pages 76-85.
    3. Belyaev, Yuri & Kriström, Bengt, 2012. "Two-step approach to Self-Selected Interval Data in Elicitation Surveys," CERE Working Papers 2012:10, CERE - the Center for Environmental and Resource Economics.
    4. Simona Bigerna & Paolo Polinori, 2015. "Willingness to Pay and Public Acceptance for Hydrogen Buses: A Case Study of Perugia," Sustainability, MDPI, Open Access Journal, vol. 7(10), pages 1-20, September.
    5. Cristeche, Estela & Tello, Diego & de Prada, Jorge & Brescia, Victor, 2015. "Contigent Valuation with Multiple Bounded Format and Uncertainty Response of a Rural Land Zoning Program in the South of Cordoba Province, Argentina," 2015 Conference, August 9-14, 2015, Milan, Italy 211551, International Association of Agricultural Economists.
    6. Bigerna, Simona & Polinori, Paolo, 2014. "Italian households׳ willingness to pay for green electricity," Renewable and Sustainable Energy Reviews, Elsevier, vol. 34(C), pages 110-121.
    7. Brahim, DJEMACI, 2015. "Using a Contingent Valuation Approach for Improved Household Solid Waste Management in Algeria," MPRA Paper 68443, University Library of Munich, Germany.
    8. Petrolia, Daniel R. & Kim, Tae-Goun, 2011. "Contingent valuation with heterogeneous reasons for uncertainty," Resource and Energy Economics, Elsevier, vol. 33(3), pages 515-526, September.
    9. Braun, Carola & Rehdanz, Katrin & Schmidt, Ulrich, 2016. "Validity of Willingness to Pay Measures under Preference Uncertainty," Open Access Publications from Kiel Institute for the World Economy 141320, Kiel Institute for the World Economy (IfW).

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