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Nonparticipation or Misspecification? The Impacts of Nonparticipation on Dichotomous Choice Contingent Valuation

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  • Timothy Haab

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Abstract

Dichotomous choice (or Referendum) contingent valuation surveys have become the predominate choice for valuing goods and services otherwise not valued in a standard market (nonmarket goods and services). A number of researchers have recently recommended that dichotomous choice contingent valuation studies include a follow-up question to all no responses to determine whether the no response is a result of unwillingness to pay, or nonparticipation. If the goal of the study is to investigate the impact of covariates on either mean willingness to pay or the probability of nonparticipation, simple identification of indifferent individuals will not suffice. A simulation study shows that existing econometric models designed to account for nonparticipation are extremely sensitive to misspecification bias. Accurate identification of the probability of nonparticipation is hampered by potential misspecification of the distribution of willingness to pay. Copyright Kluwer Academic Publishers 1999

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  • Timothy Haab, 1999. "Nonparticipation or Misspecification? The Impacts of Nonparticipation on Dichotomous Choice Contingent Valuation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 14(4), pages 443-461, December.
  • Handle: RePEc:kap:enreec:v:14:y:1999:i:4:p:443-461
    DOI: 10.1023/A:1008349525868
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    References listed on IDEAS

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    7. Birol, Ekin & Das, Sukanya, 2010. "Valuing the environment in developing countries: Modeling the impact of distrust in public authorities' ability to deliver public services on the citizens' willingness to pay for improved environmenta," IFPRI discussion papers 1043, International Food Policy Research Institute (IFPRI).
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    18. Arana, Jorge E. & Leon, Carmelo J., 2005. "Flexible mixture distribution modeling of dichotomous choice contingent valuation with heterogenity," Journal of Environmental Economics and Management, Elsevier, vol. 50(1), pages 170-188, July.
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    21. Mosi Rosenboim & Tal Shavit, 2012. "Whose money is it anyway? Using prepaid incentives in experimental economics to create a natural environment," Experimental Economics, Springer;Economic Science Association, vol. 15(1), pages 145-157, March.
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    23. Chandra Kiran B. Krishnamurthy & Bengt Kriström, 2016. "Determinants of the Price-Premium for Green Energy: Evidence from an OECD Cross-Section," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 64(2), pages 173-204, June.

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