IDEAS home Printed from https://ideas.repec.org/a/sae/enejou/v28y2007i1p75-90.html
   My bibliography  Save this article

Willingness to Pay among Swedish Households to Avoid Power Outages: A Random Parameter Tobit Model Approach

Author

Listed:
  • Fredrik Carlsson
  • Peter Martinsson

Abstract

Using a contingent valuation survey, we elicit Swedish households’ willingness to pay (WTP) to avoid power outages. In the study respondents are asked to state their WTP for avoiding nine different types of outages. We therefore apply a random parameter Tobit model since there is cross-sectional heterogeneity and a proportion of zero responses. Based on the estimations, we find that the WTP depends positively on the duration of the outages, and that WTP is significantly higher for unplanned outages. The overall variation in the WTP due to observed heterogeneity in housing and socio-economic variables is small compared to the pure effects of power outages. Policy implications of those findings are discussed.

Suggested Citation

  • Fredrik Carlsson & Peter Martinsson, 2007. "Willingness to Pay among Swedish Households to Avoid Power Outages: A Random Parameter Tobit Model Approach," The Energy Journal, , vol. 28(1), pages 75-90, January.
    • Handle: RePEc:sae:enejou:v:28:y:2007:i:1:p:75-90
    DOI: 10.5547/ISSN0195-6574-EJ-Vol28-No1-4
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.5547/ISSN0195-6574-EJ-Vol28-No1-4
    Download Restriction: no
    File URL: https://libkey.io/10.5547/ISSN0195-6574-EJ-Vol28-No1-4?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Fredrik Carlsson & Olof Johansson-Stenman, 2000. "Willingness to pay for improved air quality in Sweden," Applied Economics, Taylor & Francis Journals, vol. 32(6), pages 661-669.
    2. Richard Carson & Nicholas Flores & Norman Meade, 2001. "Contingent Valuation: Controversies and Evidence," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 19(2), pages 173-210, June.
    3. Ahmad Faruqui, Hung-po Chao, Vic Niemeyer, Jeremy Platt and Karl Stahlkopf, 2001. "Analyzing California's Power Crisis," The Energy Journal, International Association for Energy Economics, vol. 0(Number 4), pages 29-52.
    4. Michael J. Doane & Raymand S. Hartman & Chi-Keung Woo, 1988. "Household Preference for Interruptible Rate Options and the Revealed Value of Service Reliability," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 121-134.
    5. Fredrik Carlsson & Olof Johansson-Stenman & Peter Martinsson, 2004. "Is Transport Safety More Valuable in the Air?," Journal of Risk and Uncertainty, Springer, vol. 28(2), pages 147-163, March.
    6. Richard Carson & Theodore Groves, 2007. "Incentive and informational properties of preference questions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(1), pages 181-210, May.
    7. Bengt Kriström, 1993. "Comparing continuous and discrete contingent valuation questions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 3(1), pages 63-71, February.
    8. Beenstock, Michael & Goldin, Ephraim & Haitovsky, Yoel, 1998. "Response bias in a conjoint analysis of power outages," Energy Economics, Elsevier, vol. 20(2), pages 135-156, April.
    9. Thomas C. Brown & Patricia A. Champ & Richard C. Bishop & Daniel W. McCollum, 1996. "Which Response Format Reveals the Truth about Donations to a Public Good?," Land Economics, University of Wisconsin Press, vol. 72(2), pages 152-166.
    10. John List & Craig Gallet, 2001. "What Experimental Protocol Influence Disparities Between Actual and Hypothetical Stated Values?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 20(3), pages 241-254, November.
    11. Michael J. Doane & Raymond S. Hartman & Chi-Keung Woo, 1988. "Households' Perceived Value of Service Reliability: An Analysis of Contingent Valuation Data," The Energy Journal, International Association for Energy Economics, vol. 0(Special I), pages 135-150.
    12. Kenneth Train, 2003. "Discrete Choice Methods with Simulation," Online economics textbooks, SUNY-Oswego, Department of Economics, number emetr2.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Carlsson, Fredrik & Martinsson, Peter, 2006. "Do Experience and Cheap Talk influence Willingness to Pay in an Open-Ended Contingent Valuation Survey?," Working Papers in Economics 190, University of Gothenburg, Department of Economics.
    2. Carlsson, Fredrik & Martinsson, Peter, 2008. "Does it matter when a power outage occurs? -- A choice experiment study on the willingness to pay to avoid power outages," Energy Economics, Elsevier, vol. 30(3), pages 1232-1245, May.
    3. Carlsson, Fredrik & Martinsson, Peter & Akay, Alpaslan, 2011. "The effect of power outages and cheap talk on willingness to pay to reduce outages," Energy Economics, Elsevier, vol. 33(5), pages 790-798, September.
    4. Longo, Alberto & Markandya, Anil & Petrucci, Marta, 2008. "The internalization of externalities in the production of electricity: Willingness to pay for the attributes of a policy for renewable energy," Ecological Economics, Elsevier, vol. 67(1), pages 140-152, August.
    5. Jie He & Jérôme Dupras & Thomas G. Poder, 2018. "Payment and Provision Consequentiality in Voluntary Contribution Mechanism: Single or Double “Knife-Edge” Evidence?," Cahiers de recherche 18-02, Departement d'économique de l'École de gestion à l'Université de Sherbrooke.
    6. Jens Abildtrup & Jette Bredahl Jacobsen & Suzanne Elizabeth Vedel & Udo Mantau & Robert Mavsar & Davide Pettenella & Irina Prokofieva & Florian Schubert & Anne Stenger & Elsa Varela & Enrico Vidale & , 2024. "Preferences for climate change policies: the role of co-benefits," Journal of Environmental Economics and Policy, Taylor & Francis Journals, vol. 13(1), pages 110-128, January.
    7. Vossler, Christian A. & Watson, Sharon B., 2013. "Understanding the consequences of consequentiality: Testing the validity of stated preferences in the field," Journal of Economic Behavior & Organization, Elsevier, vol. 86(C), pages 137-147.
    8. Richard C. Bishop & Kevin J. Boyle, 2019. "Reliability and Validity in Nonmarket Valuation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 72(2), pages 559-582, February.
    9. Hultkrantz, Lars & Svensson, Mikael, 2012. "The value of a statistical life in Sweden: A review of the empirical literature," Health Policy, Elsevier, vol. 108(2), pages 302-310.
    10. Jie He & Jérôme Dupras & Franck Ndefo & Thomas Poder, 2020. "Payment and provision consequentiality in voluntary contribution mechanism: separate or joint effects?," Letters in Spatial and Resource Sciences, Springer, vol. 13(1), pages 11-36, April.
    11. Manuel Frondel & Stephan Sommer & Lukas Tomberg, 2021. "WTA-WTP Disparity: The Role of Perceived Realism of the Valuation Setting," Land Economics, University of Wisconsin Press, vol. 97(1), pages 196-206.
    12. Thijs Dekker & Roy Brouwer & Marjan Hofkes & Klaus Moeltner, 2011. "The Effect of Risk Context on the Value of a Statistical Life: a Bayesian Meta-model," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 49(4), pages 597-624, August.
    13. Lopez-Becerra, E.I. & Alcon, F., 2021. "Social desirability bias in the environmental economic valuation: An inferred valuation approach," Ecological Economics, Elsevier, vol. 184(C).
    14. Mohammed H. Alemu & Søren B. Olsen, 2017. "Can a Repeated Opt-Out Reminder remove hypothetical bias in discrete choice experiments? An application to consumer valuation of novel food products," IFRO Working Paper 2017/05, University of Copenhagen, Department of Food and Resource Economics.
    15. Norwood Bailey & Lusk Jayson L, 2005. "Instrument-Induced Bias in Donation Mechanisms: Evidence from the Field," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(2), pages 1-26, December.
    16. Elina Lampi & Matilda Orth, 2009. "Who Visits the Museums? A Comparison between Stated Preferences and Observed Effects of Entrance Fees," Kyklos, Wiley Blackwell, vol. 62(1), pages 85-102, February.
    17. Sahan T. M. Dissanayake & Andrew G. Meyer, 2021. "Incorporating Beliefs and Experiences into Choice Experiment Analysis: Implications for Policy Recommendations," Applied Economic Perspectives and Policy, John Wiley & Sons, vol. 43(2), pages 823-848, June.
    18. Schlapfer, Felix, 2008. "Contingent valuation: A new perspective," Ecological Economics, Elsevier, vol. 64(4), pages 729-740, February.
    19. Grebitus, Carola & Lusk, Jayson L. & Nayga, Rodolfo M., 2013. "Explaining differences in real and hypothetical experimental auctions and choice experiments with personality," Journal of Economic Psychology, Elsevier, vol. 36(C), pages 11-26.
    20. Catherine L. Kling & Daniel J. Phaneuf & Jinhua Zhao, 2012. "From Exxon to BP: Has Some Number Become Better Than No Number?," Journal of Economic Perspectives, American Economic Association, vol. 26(4), pages 3-26, Fall.

    More about this item

    Keywords

    Power outages; Contingent valuation; Random parameters; Tobit model; electricity; Sweden;
    All these keywords.

    JEL classification:

    • F0 - International Economics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:enejou:v:28:y:2007:i:1:p:75-90. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.