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The advantages of contingent valuation methods for benefit-cost analysis


  • David Brookshire
  • Thomas Crocker


The preceding is a taxonomic discussion of some reasons why contingent market methods may often be a superior means of generating data with which to value non-market commodities. We have argued that economists have erred in viewing the situations these methods posit as necessarily fictional; that the data generated by the methods may, for non-marketed goods and the activities with which they are associated, accord more closely with the conditions of received economic theory; that the methods can make it easier to remove the difficulties of estimation and interpretation introduced by confounding variables; and that they often permit one to deal more readily with phenomena that have not been in the range of historical experience. Nevertheless, whatever the advantages, a major disadvantage remains. Until detailed analytical knowledge is acquired of the manner in which expectations are formed, there exists no way to refute empirical propositions established from contingent markets. Nevertheless, the previously mentioned South Coast Air Basin experiment, where the bids obtained for clean air conformed fairly closely to the values implied in a residential property value study, suggest that contingent valuations have a basis in the real decision processes of consumers. Copyright Martinus Nijhoff Publishers 1981

Suggested Citation

  • David Brookshire & Thomas Crocker, 1981. "The advantages of contingent valuation methods for benefit-cost analysis," Public Choice, Springer, vol. 36(2), pages 235-252, January.
  • Handle: RePEc:kap:pubcho:v:36:y:1981:i:2:p:235-252
    DOI: 10.1007/BF00123782

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    References listed on IDEAS

    1. Keeley, Michael C, et al, 1978. "The Estimation of Labor Supply Models Using Experimental Data," American Economic Review, American Economic Association, vol. 68(5), pages 873-887, December.
    2. Bohm, Peter, 1972. "Estimating demand for public goods: An experiment," European Economic Review, Elsevier, vol. 3(2), pages 111-130.
    3. Hori, Hajime, 1975. "Revealed Preference for Public Goods," American Economic Review, American Economic Association, vol. 65(5), pages 978-991, December.
    4. V. Kerry Smith & John V. Krutilla, 1979. "Resource and Environmental Constraints to Growth," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 61(3), pages 395-408.
    5. Bradford, David F, 1970. "Benefit-Cost Analysis and Demand Curves for Public Goods," Kyklos, Wiley Blackwell, vol. 23(4), pages 775-791.
    6. Paul W. O'Hanlon & J. A. Sinden, 1978. ""Scope for Valuation of Environmental Goods": Comment," Land Economics, University of Wisconsin Press, vol. 54(3), pages 381-387.
    7. Randall, Alan & Ives, Berry & Eastman, Clyde, 1974. "Bidding games for valuation of aesthetic environmental improvements," Journal of Environmental Economics and Management, Elsevier, vol. 1(2), pages 132-149, August.
    8. Sinden, J. A. & Wyckoff, J. B., 1976. "Indifference mapping : An empirical methodology for economic evaluation of the environment," Regional Science and Urban Economics, Elsevier, vol. 6(1), pages 81-103, March.
    9. Peter Bohm, 1972. "Estimating the demand for public goods: An experiment," Framed Field Experiments 00126, The Field Experiments Website.
    10. Brookshire, David S. & Ives, Berry C. & Schulze, William D., 1976. "The valuation of aesthetic preferences," Journal of Environmental Economics and Management, Elsevier, vol. 3(4), pages 325-346, December.
    11. Strauss, Robert P. & Hughes, G. David, 1976. "A new approach to the demand for public goods," Journal of Public Economics, Elsevier, vol. 6(3), pages 191-204, October.
    12. Bradford, David F. & Hildebrandt, Gregory G., 1977. "Observable preferences for public goods," Journal of Public Economics, Elsevier, vol. 8(2), pages 111-131, October.
    13. Alan Randall & Orlen Grunewald & Sue Johnson & Richard Ausness & Angelos Pagoulatos, 1978. "Reclaiming Coal Surface Mines in Central Appalachia: A Case Study of the Benefits and Costs," Land Economics, University of Wisconsin Press, vol. 54(4), pages 472-489.
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    Cited by:

    1. Don Coursey & William Schulze, 1986. "The application of laboratory experimental economics to the contingent valuation of public goods," Public Choice, Springer, vol. 49(1), pages 47-68, January.

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