IDEAS home Printed from
   My bibliography  Save this article

Valuing externalities from water supply: Status quo, choice complexity and individual random effects in panel kernel logit analysis of choice experiments


  • Riccardo Scarpa
  • Kenneth G. Willis
  • Melinda Acutt


Choice experiments are often implemented with choice sets including one alternative depicting the status quo. Utility from status quo is experienced by the respondent, while utility associated with experimentally designed hypothetical alternatives is only conjectured by respondents. The effects of explicitly accounting for such a difference in the econometric analysis of the data are often unreported, or limited to fitting a 'status quo' constant. The paper proposes a model that explicitly accounts for these effects and attempts their decomposition using data from two choice modelling exercises designed to value the provision of environmental goods. Preferences for change versus status quo are explored with standard specifications along with a less usually applied error component analysis via mixed logit. The results suggest that alternatives offering changes from status quo do not share the same preference structure as the status quo alternative, and that estimates of spread parameters in zero-mean error components can be decomposed conditional on respondents' socio-economic characteristics. It is argued that these findings have implications for practitioners and their stance towards the strategies for the econometric analysis of choice modelling data for the purpose of valuation.

Suggested Citation

  • Riccardo Scarpa & Kenneth G. Willis & Melinda Acutt, 2007. "Valuing externalities from water supply: Status quo, choice complexity and individual random effects in panel kernel logit analysis of choice experiments," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 50(4), pages 449-466.
  • Handle: RePEc:taf:jenpmg:v:50:y:2007:i:4:p:449-466 DOI: 10.1080/09640560701401861

    Download full text from publisher

    File URL:
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. Johansson,Per-Olov, 1995. "Evaluating Health Risks," Cambridge Books, Cambridge University Press, number 9780521478786, March.
    2. Anna Alberini & Maureen Cropper & Alan Krupnick & Nathalie Simon, 2006. "Willingness to pay for mortality risk reductions: Does latency matter?," Journal of Risk and Uncertainty, Springer, vol. 32(3), pages 231-245, May.
    3. Krupnick, Alan & Cropper, Maureen & Alberini, Anna & Simon, Nathalie & Itaoka, Kenshi & Akai, Makoto, 1999. "Mortality Risk Valuation for Environmental Policy," Discussion Papers dp-99-47, Resources For the Future.
    4. Hugh Gravelle & Dave Smith, 2001. "Discounting for health effects in cost-benefit and cost-effectiveness analysis," Health Economics, John Wiley & Sons, Ltd., vol. 10(7), pages 587-599.
    5. Johannesson, Magnus & Johansson, Per-Olov, 1997. "Quality of life and the WTP for an increased life expectancy at an advanced age," Journal of Public Economics, Elsevier, vol. 65(2), pages 219-228, August.
    6. Viscusi, W Kip & Hakes, Jahn K & Carlin, Alan, 1997. "Measures of Mortality Risks," Journal of Risk and Uncertainty, Springer, vol. 14(3), pages 213-233, May-June.
    7. Johansson,Per-Olov, 1995. "Evaluating Health Risks," Cambridge Books, Cambridge University Press, number 9780521472852, March.
    Full references (including those not matched with items on IDEAS)

    More about this item


    Access and download statistics


    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:taf:jenpmg:v:50:y:2007:i:4:p:449-466. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Chris Longhurst). General contact details of provider: .

    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.

    We have no references for this item. You can help adding them by using 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.