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Is Hypothetical Bias a Universal Phenomenon? A Multinational Investigation

  • Mariah D. Ehmke
  • Jayson L. Lusk
  • John A. List

A concern with the contingent valuation method (CVM) is the finding that hypothetical and real statements of value often differ. We test whether hypothetical bias, broadly defined, is independent of location by comparing real and hypothetical votes on a dichotomous choice referendum in China, France, Indiana, Kansas, and Niger. We find significant differences in hypothetical bias across locations and reject the hypothesis that hypothetical bias is independent of location. As opposed to the typical finding reported in the literature, subjects in Niger significantly understated their willingness-to-pay in the hypothetical referendum.

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File URL: http://le.uwpress.org/cgi/reprint/84/3/489
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Article provided by University of Wisconsin Press in its journal Land Economics.

Volume (Year): 84 (2008)
Issue (Month): 3 ()
Pages: 489-500

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Handle: RePEc:uwp:landec:v:84:y:2008:i:3:p:489-500
Contact details of provider: Web page: http://le.uwpress.org/

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  1. John A. List, 2003. "Neoclassical Theory Versus Prospect Theory: Evidence from the Marketplace," NBER Working Papers 9736, National Bureau of Economic Research, Inc.
  2. Patricia Champ & Richard Bishop, 2001. "Donation Payment Mechanisms and Contingent Valuation: An Empirical Study of Hypothetical Bias," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 19(4), pages 383-402, August.
  3. Vernon L. Smith, 2003. "Constructivist and Ecological Rationality in Economics," American Economic Review, American Economic Association, vol. 93(3), pages 465-508, June.
  4. Johannesson, Magnus, et al, 1999. "Calibrating Hypothetical Willingness to Pay Responses," Journal of Risk and Uncertainty, Springer, vol. 18(1), pages 21-32, April.
  5. Brouwer, Roy & Bateman, Ian J., 2005. "Benefits transfer of willingness to pay estimates and functions for health-risk reductions: a cross-country study," Journal of Health Economics, Elsevier, vol. 24(3), pages 591-611, May.
  6. Ready, Richard & Navrud, Stale, 2006. "International benefit transfer: Methods and validity tests," Ecological Economics, Elsevier, vol. 60(2), pages 429-434, December.
  7. Carson, Richard T & Groves, Theodore, 2010. "Incentive and Information Properties of Preference Questions," University of California at San Diego, Economics Working Paper Series qt88d8644g, Department of Economics, UC San Diego.
  8. Ian Bateman & Roy Brouwer & Stavros Georgiou & Nick Hanley & Fernando Machado & Susana Mourato & Caroline Saunders, 2005. "A ‘Natural Experiment’ Approach to Contingent Valuation of Private and Public UV Health Risk Reduction Strategies in Low and High Risk Countries," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 31(1), pages 47-72, 05.
  9. John List & Craig Gallet, 2001. "What Experimental Protocol Influence Disparities Between Actual and Hypothetical Stated Values?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 20(3), pages 241-254, November.
  10. Richard Ready & Ståle Navrud & Brett Day & Richard Dubourg & Fernando Machado & Susana Mourato & Frank Spanninks & Maria Rodriquez, 2004. "Benefit Transfer in Europe: How Reliable Are Transfers between Countries?," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 29(1), pages 67-82, September.
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