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Is Hypothetical Bias a Universal Phenomenon? A Multinational Investigation

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

Abstract

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.

Suggested Citation

  • Mariah D. Ehmke & Jayson L. Lusk & John A. List, 2008. "Is Hypothetical Bias a Universal Phenomenon? A Multinational Investigation," Land Economics, University of Wisconsin Press, vol. 84(3), pages 489-500.
  • Handle: RePEc:uwp:landec:v:84:y:2008:i:3:p:489-500
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    1. 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, Springer;European Association of Environmental and Resource Economists, vol. 29(1), pages 67-82, September.
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    3. John A. List, 2004. "Neoclassical Theory Versus Prospect Theory: Evidence from the Marketplace," Econometrica, Econometric Society, vol. 72(2), pages 615-625, March.
    4. 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, Springer;European Association of Environmental and Resource Economists, vol. 31(1), pages 47-72, May.
    5. Vernon L. Smith, 2003. "Constructivist and Ecological Rationality in Economics," American Economic Review, American Economic Association, vol. 93(3), pages 465-508, June.
    6. 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.
    7. Patricia Champ & Richard Bishop, 2001. "Donation Payment Mechanisms and Contingent Valuation: An Empirical Study of Hypothetical Bias," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 19(4), pages 383-402, August.
    8. Johannesson, Magnus & Blomquist, Glenn C. & Blumenschein, Karen & Johansson, Per-olov & Liljas, Bengt & O'Conor, Richard M., 1999. "Calibrating Hypothetical Willingness to Pay Responses," Journal of Risk and Uncertainty, Springer, vol. 18(1), pages 21-32, April.
    9. Ready, Richard & Navrud, Stale, 2006. "International benefit transfer: Methods and validity tests," Ecological Economics, Elsevier, vol. 60(2), pages 429-434, December.
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    Cited by:

    1. Jacquemet, Nicolas & Joule, Robert-Vincent & Luchini, Stéphane & Shogren, Jason F., 2013. "Preference elicitation under oath," Journal of Environmental Economics and Management, Elsevier, vol. 65(1), pages 110-132.
    2. Volinskiy, Dmitriy & Adamowicz, Wiktor L. & Veeman, Michele, 2011. "Predicting versus testing: a conditional cross-forecasting accuracy measure for hypothetical bias," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 0(Issue 3), pages 1-22, September.
    3. Caplan, Arthur J. & Aadland, David & Macharia, Anthony, 2010. "Estimating Hypothetical Bias in Economically Emergent Africa: A Generic Public Good Experiment," Agricultural and Resource Economics Review, Cambridge University Press, vol. 39(02), pages 344-358, April.
    4. Lindhjem Henrik & Pedersen Simen, 2012. "Should Publicly Funded Postal Services be Reduced? A Cost-Benefit Analysis of the Universal Service Obligation in Norway," Review of Network Economics, De Gruyter, vol. 11(2), pages 1-33, June.
    5. Dominique Ami & Frédéric Aprahamian & Olivier Chanel & Stéphane Luchini, 2011. "A Test of Cheap Talk in Different Hypothetical Contexts: The Case of Air Pollution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 50(1), pages 111-130, September.
    6. Araña, Jorge E. & León, Carmelo J., 2013. "Dynamic hypothetical bias in discrete choice experiments: Evidence from measuring the impact of corporate social responsibility on consumers demand," Ecological Economics, Elsevier, vol. 87(C), pages 53-61.
    7. Yiannis Kountouris & Kyriaki Remoundou, 2016. "Cultural Influence on Preferences and Attitudes for Environmental Quality," Kyklos, Wiley Blackwell, vol. 69(2), pages 369-397, May.
    8. Nicolas Jacquemet & Stephane Luchini & Robert-Vincent Joule & Jason Shogren, 2008. "Do French student really bid sincerely?," Working Papers halshs-00277282, HAL.
    9. Carlsson, Fredrik & Kataria, Mitesh & Krupnick, Alan & Lampi, Elina & Löfgren, Åsa & Qin, Ping & Sterner, Thomas, 2013. "The truth, the whole truth, and nothing but the truth—A multiple country test of an oath script," Journal of Economic Behavior & Organization, Elsevier, vol. 89(C), pages 105-121.
    10. Lindhjem, Henrik & Navrud, Ståle, 2011. "Are Internet surveys an alternative to face-to-face interviews in contingent valuation?," Ecological Economics, Elsevier, vol. 70(9), pages 1628-1637, July.
    11. Nicolas Jacquemet & Robert‐Vincent Joule & Stéphane Luchini & Jason F. Shogren, 2011. "Do People Always Pay Less Than They Say? Testbed Laboratory Experiments with IV and HG Values," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 13(5), pages 857-882, October.
    12. repec:hal:cesptp:halshs-00731244 is not listed on IDEAS
    13. Lindhjem, Henrik & Navrud, Ståle, 2010. "Can cheap panel-based internet surveys substitute costly in-person interviews in CV surveys?," MPRA Paper 24069, University Library of Munich, Germany.
    14. repec:dau:papers:123456789/9717 is not listed on IDEAS
    15. Wakamatsu, Hiroki & Miyata, Tsutom & Kamiyama, Ryutaro, 2016. "An Analysis of Introducing Unspawned Oysters in Japan Using a Contingent Valuation Method and Analytic Hierarchy Process," MPRA Paper 69680, University Library of Munich, Germany.
    16. 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.
    17. Penn, Jerrod & Hu, Wuyang & Ye, Tao, 2018. "Cheap Talk, Consequentiality, and Certainty Follow-up as Hypothetical Bias Mitigation Techniques: A Cross Country Comparison," 2018 Annual Meeting, August 5-7, Washington, D.C. 274018, Agricultural and Applied Economics Association.

    More about this item

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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