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Dealing with zero response data from contingent valuation surveys: application of least absolute deviations estimator

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  • Seung-Hoon Yoo
  • Seung-Jun Kwak
  • Tai-Yoo Kim

Abstract

Data on willingness-to-pay (WTP) collected from contingent valuation surveys are usuallycensoredat zero. Insuch cases, ordinary least squares estimationof the WTP equation produces inconsistent parameter estimates. The maximum likelihood estimation of the Tobit model, which is widely used in this case, is not robust to heteroscedasticity and non-normal error structure. A least absolute deviations estimator allows for the censored data structure and is robust to these problems. In addition, the technique is useful in the case of small amounts of data. It is applied to household survey data in which the contingent valuation question involved the benefit of greenhouse gases reduction policy in Korea.

Suggested Citation

  • Seung-Hoon Yoo & Seung-Jun Kwak & Tai-Yoo Kim, 2000. "Dealing with zero response data from contingent valuation surveys: application of least absolute deviations estimator," Applied Economics Letters, Taylor & Francis Journals, vol. 7(3), pages 181-184.
    • Handle: RePEc:taf:apeclt:v:7:y:2000:i:3:p:181-184
    DOI: 10.1080/135048500351753
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    Citations

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    Cited by:

    1. Kwak, Seung-Jun & Yoo, Seung-Hoon & Kim, Tai-Yoo, 2001. "A constructive approach to air-quality valuation in Korea," Ecological Economics, Elsevier, vol. 38(3), pages 327-344, September.
    2. Seung-Hoon Yoo & Seung-Jun Kwak & Tai-Yoo Kim, 2001. "Modelling willingness to pay responses from dichotomous choice contingent valuation surveys with zero observations," Applied Economics, Taylor & Francis Journals, vol. 33(4), pages 523-529.
    3. Galina Williams, 2015. "Households Willingness to Pay for the Emissions Reduction Policy, Queensland, Australia," SAGE Open, , vol. 5(3), pages 21582440156, September.
    4. Noboru Hidano & Takaaki Kato, 2008. "Determining variability of willingness to pay for Japan’s antiglobal-warming policies: a comparison of contingent valuation surveys," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 9(4), pages 259-281, December.
    5. Mesa-Jurado, Maria A. & Martin-Ortega, Julia & Ruto, Eric & Berbel, Julio, 2011. "The economic value of guaranteed water supply for irrigation under scarcity conditions," 2011 International Congress, August 30-September 2, 2011, Zurich, Switzerland 114650, European Association of Agricultural Economists.
    6. Storm, Hugo & Heckelei, Thomas & Heidecke, Claudia, 2010. "Demand Estimation for Irrigation Water in the Moroccan Drâa Valley using Contingent Valuation," Discussion Papers 162895, University of Bonn, Institute for Food and Resource Economics.
    7. Yoo, Seung-Hoon & Kim, Tai-Yoo & Lee, Jai-Ki, 2001. "Modeling zero response data from willingness to pay surveys: A semi-parametric estimation," Economics Letters, Elsevier, vol. 71(2), pages 191-196, May.
    8. Noboru Hidano & Takaaki Kato, 2008. "Determining variability of willingness to pay for Japan’s antiglobal-warming policies: a comparison of contingent valuation surveys," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 9(4), pages 259-281, December.

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