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The Effect of Protest Votes on the Estimates of WTP for Use Values of Recreational Sites

  • Elisabetta Strazzera

    ()

  • Margarita Genius
  • Riccardo Scarpa
  • George Hutchinson

Contingent valuation studies are often characterized by a considerable number of protest responses, which may cause selectivity bias on the final estimates for WTP. Sample selection models can detect and – if necessary – correct selectivity bias. In economic applications where the relevant dependent variable is continuous, sample selection models are generally estimated using Heckman's 2-step method rather than the FIML estimator. Either method has its own drawback: computational complexity for the FIML method, susceptibility to collinearity problems for the 2-step method. Using data on valuation of forest resources for recreational use, we analyse the performance of the two estimators. In this application, given the presence of some collinearity, the FIML is preferred to the 2-step method. A procedure is outlined to deal with selectivity problems in similar settings. Copyright Kluwer Academic Publishers 2003

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Article provided by Springer & European Association of Environmental and Resource Economists in its journal Environmental and Resource Economics.

Volume (Year): 25 (2003)
Issue (Month): 4 (August)
Pages: 461-476

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Handle: RePEc:kap:enreec:v:25:y:2003:i:4:p:461-476
DOI: 10.1023/A:1025098431440
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  3. Werner, Megan, 1999. "Allowing for Zeros in Dichotomous-Choice Contingent-Valuation Models," Journal of Business & Economic Statistics, American Statistical Association, vol. 17(4), pages 479-86, October.
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  5. Leung, S.F. & Yu, S., 1996. "Collinearity and Two-Step Estimation of Sample Selection Models: Problems, Origins and Remedies," RCER Working Papers 419, University of Rochester - Center for Economic Research (RCER).
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  7. Shyamsundar, Priya & Kramer, Randall A., 1996. "Tropical Forest Protection: An Empirical Analysis of the Costs Borne by Local People," Journal of Environmental Economics and Management, Elsevier, vol. 31(2), pages 129-144, September.
  8. Richard T. Carson, 2011. "Contingent Valuation," Books, Edward Elgar Publishing, number 2489.
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  13. Begona Alvarez-Farizo, 1999. "Estimating the Benefits of Agri-environmental Policy: Econometric Issues in Open-ended Contingent Valuation Studies," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 42(1), pages 23-43.
  14. 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.
  15. Francis Vella, 1998. "Estimating Models with Sample Selection Bias: A Survey," Journal of Human Resources, University of Wisconsin Press, vol. 33(1), pages 127-169.
  16. Bengt Kriström, 1997. "Spike Models in Contingent Valuation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(3), pages 1013-1023.
  17. Cam Donaldson & Andrew Jones & Tracy Mapp & Jan Abel Olson, 1998. "Limited dependent variables in willingness to pay studies: applications in health care," Applied Economics, Taylor & Francis Journals, vol. 30(5), pages 667-677.
  18. Whitehead, John C. & Groothuis, Peter A. & Blomquist, Glenn C., 1993. "Testing for non-response and sample selection bias in contingent valuation : Analysis of a combination phone/mail survey," Economics Letters, Elsevier, vol. 41(2), pages 215-220.
  19. Halstead, John M. & Luloff, A.E. & Stevens, Thomas H., 1992. "Protest Bidders In Contingent Valuation," Northeastern Journal of Agricultural and Resource Economics, Northeastern Agricultural and Resource Economics Association, vol. 21(2), October.
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  21. Elisabetta Strazzera & Riccardo Scarpa & Pinuccia Calia & Guy Garrod & Kenneth Willis, 2003. "Modelling zero values and protest responses in contingent valuation surveys," Applied Economics, Taylor & Francis Journals, vol. 35(2), pages 133-138.
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