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Obtaining Welfare Bounds in Discrete-Response Valuation Studies: A Non-Parametric Approach

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  • Mattias Boman
  • Göran Bostedt
  • Bengt Kriström

Abstract

Welfare change estimates obtained from discrete-response contingent valuation experiments normally assume a particular distribution of willingness-to-pay (W TP).U sing conventional microeconomic theory, we derive upper and lower bounds on such estimates. These bounds are interpreted statistically in terms of non-parametric estimators of mean WTP and its variance. Two contingent valuation surveys illustrate the proposed bounds, and the performances of the variance estimators are scrutinized with a Monte Carlo simulation. All calculations can be made by hand, simplifying communication among those involved in interpreting result from contingent valuation studies using discrete-response data.

Suggested Citation

  • Mattias Boman & Göran Bostedt & Bengt Kriström, 1999. "Obtaining Welfare Bounds in Discrete-Response Valuation Studies: A Non-Parametric Approach," Land Economics, University of Wisconsin Press, vol. 75(2), pages 284-294.
  • Handle: RePEc:uwp:landec:v:75:y:1999:i:2:p:284-294
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    Citations

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    Cited by:

    1. Annunziata Vita, 2012. "La Valutazione Economica Dei Parchi Marini. Il Caso “Punta Infreschi”," Working Papers 3_220, Dipartimento di Scienze Economiche e Statistiche, Università degli Studi di Salerno.
    2. Ozbafli, Aygul & Jenkins, Glenn P., 2015. "The willingness to pay by households for improved reliability of electricity service in North Cyprus," Energy Policy, Elsevier, vol. 87(C), pages 359-369.
    3. Silvia Ferrini & Carlo Fezzi, 2012. "Generalized Additive Models for Nonmarket Valuation via Revealed or Stated Preference Methods," Land Economics, University of Wisconsin Press, vol. 88(4), pages 782-802.
    4. Tuan, Tran Huu & Navrud, Stale, 2009. "Applying the dissonance-minimising format to value cultural heritage in developing countries," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 53(3), September.
    5. Bugbee, Marcia & Loureiro, Maria L., 2003. "A Risk Perception Analysis Of Genetically Modified Foods Based On Stated Preferences," 2003 Annual meeting, July 27-30, Montreal, Canada 22017, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    6. Pere Riera & Raúl Brey & Guillermo Gándara, 2008. "Bid design for non-parametric contingent valuation with a single bounded dichotomous choice format," Hacienda Pública Española, IEF, vol. 186(3), pages 43-60, October.
    7. Huhtala, Anni & Pouta, Eija, 12. "Welfare Incidence of Subsidized Recreation Services in Finland," Scandinavian Forest Economics: Proceedings of the Biennial Meeting of the Scandinavian Society of Forest Economics, Scandinavian Society of Forest Economics, issue 40, May.
    8. Christian A. Vossler & Robert G. Ethier & Gregory L. Poe & Michael P. Welsh, 2003. "Payment Certainty in Discrete Choice Contingent Valuation Responses: Results from a Field Validity Test," Southern Economic Journal, Southern Economic Association, vol. 69(4), pages 886-902, April.
    9. Huhtala, Anni & Pouta, Eija, 2008. "User fees, equity and the benefits of public outdoor recreation services," Journal of Forest Economics, Elsevier, vol. 14(2), pages 117-132, April.
    10. Loureiro, Maria L. & Loomis, John B. & Nahuelhual, Laura, 2004. "A comparison of a parametric and a non-parametric method to value a non-rejectable public good," Journal of Forest Economics, Elsevier, vol. 10(2), pages 61-74, September.
    11. Riccardo Scarpa & Kenneth Willis & Guy Garrod, 2001. "Estimating Benefits for Effective Enforcement of Speed Reduction from Dichotomous-Choice CV," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 20(4), pages 281-304, December.
    12. Salvador Del Saz-Salazar & Leandro García-Menendez, 2001. "Restoring Port Areas for Recreation Purposes: A contingent Valuation Study," ERES eres2001_146, European Real Estate Society (ERES).
    13. Salvador Del Saz-Salazar & Leandro Garcia-Menendez, 2001. "Willingness to Pay for Environmental Improvements in a Large City Evidence from The Spike Model and From a Non-Parametric Approach," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 20(2), pages 103-112, October.
    14. Pinto Prades, Jose Luis & Brey Sanchez, Raul, 2014. "Age effects in mortality risk valuation," Health Economics Working Paper Series 201401, Glasgow Caledonian University, Yunus Centre.
    15. Boman, Mattias, 2009. "To pay or not to pay for biodiversity in forests - What scale determines responses to willingness to pay questions with uncertain response options?," Journal of Forest Economics, Elsevier, vol. 15(1-2), pages 79-91, January.
    16. Yoo, Seung-Hoon & Kwak, So-Yoon, 2009. "Willingness to pay for green electricity in Korea: A contingent valuation study," Energy Policy, Elsevier, vol. 37(12), pages 5408-5416, December.
    17. repec:sep:wpaper:3_320 is not listed on IDEAS
    18. Won-Seok Lee & Seung-Hoon Yoo & Jeehyeong Kim, 2013. "Measuring the Economic Benefits of the Tap Water Supply Service in Urban Areas: The Case of Korea," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 27(2), pages 619-627, January.
    19. Henry-Osorio, Miguel & Mittelhammer, Ronald C., 2012. "An Information-Theoretic Approach to Modeling Binary Choices: Estimating Willingness to Pay for Recreation Site Attributes," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 123432, Agricultural and Applied Economics Association.
    20. Parsons, George R. & Myers, Kelley, 2016. "Fat tails and truncated bids in contingent valuation: An application to an endangered shorebird species," Ecological Economics, Elsevier, vol. 129(C), pages 210-219.
    21. repec:spr:eujhec:v:18:y:2017:i:7:d:10.1007_s10198-016-0852-8 is not listed on IDEAS
    22. W. George Hutchinson & Riccardo Scarpa & Susan M. Chilton & T. McCallion, 2001. "Parametric and Non-Parametric Estimates of Willingness to Pay for Forest Recreation in Northern Ireland: A Discrete Choice Contingent Valuation Study with Follow-Ups," Journal of Agricultural Economics, Wiley Blackwell, vol. 52(1), pages 104-122.
    23. repec:ebl:ecbull:eb-16-00642 is not listed on IDEAS
    24. Brett Day, 2007. "Distribution-free estimation with interval-censored contingent valuation data: troubles with Turnbull?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(4), pages 777-795, August.

    More about this item

    JEL classification:

    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources

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