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Testing the Fundamental Assumption of Choice Experiments: Are Values Absolute or Relative?

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  • Tiziana Luisetti
  • Ian J. Bateman
  • R. Kerry Turner

Abstract

A split sample experiment is conducted to test one of the most fundamental assumptions underpinning choice experiments in an environmental setting: whether stated values are absolute or relative. The test uses a natural experiment involving respondents at different home locations relative to potential new wetland sites. Respondents were presented with one of two ranges of distances. An absolute value interpretation requires that the functional relations with distance derived from these two ranges be consistent with each other. We reject a null hypothesis of no range bias, suggesting that respondents may perceive attribute levels in a relative rather than absolute sense.

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  • Tiziana Luisetti & Ian J. Bateman & R. Kerry Turner, 2011. "Testing the Fundamental Assumption of Choice Experiments: Are Values Absolute or Relative?," Land Economics, University of Wisconsin Press, vol. 87(2), pages 284-296.
    • Handle: RePEc:uwp:landec:v:87:y:2011:ii:1:p:284-296
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    References listed on IDEAS

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    5. Brett Day & Ian Bateman & Iain Lake, 2007. "Beyond implicit prices: recovering theoretically consistent and transferable values for noise avoidance from a hedonic property price model," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(1), pages 211-232, May.
    6. Bateman, Ian J. & Cole, Matthew & Cooper, Philip & Georgiou, Stavros & Hadley, David & Poe, Gregory L., 2004. "On visible choice sets and scope sensitivity," Journal of Environmental Economics and Management, Elsevier, vol. 47(1), pages 71-93, January.
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    8. Hanley, Nick & Adamowicz, Wiktor & Wright, Robert E., 2005. "Price vector effects in choice experiments: an empirical test," Resource and Energy Economics, Elsevier, vol. 27(3), pages 227-234, October.
    9. Ian Bateman & Brett Day & Graham Loomes & Robert Sugden, 2007. "Can ranking techniques elicit robust values?," Journal of Risk and Uncertainty, Springer, vol. 34(1), pages 49-66, February.
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    Cited by:

    1. Kragt, Marit Ellen, 2013. "Comparing models of unobserved heterogeneity in environmental choice experiments," Working Papers 144447, University of Western Australia, School of Agricultural and Resource Economics.
    2. Börger, Tobias & Hattam, Caroline & Burdon, Daryl & Atkins, Jonathan P. & Austen, Melanie C., 2014. "Valuing conservation benefits of an offshore marine protected area," Ecological Economics, Elsevier, vol. 108(C), pages 229-241.
    3. Christine Bertram & Heini Ahtiainen & Jürgen Meyerhoff & Kristine Pakalniete & Eija Pouta & Katrin Rehdanz, 2020. "Contingent Behavior and Asymmetric Preferences for Baltic Sea Coastal Recreation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 75(1), pages 49-78, January.
    4. Marit Kragt & Jeffrey Bennett, 2012. "Attribute Framing in Choice Experiments: How Do Attribute Level Descriptions Affect Value Estimates?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 51(1), pages 43-59, January.
    5. Kyriaki Remoundou & Fikret Adaman & Phoebe Koundouri & Paulo A.L.D. Nunes, 2011. "Are Preferences for Environmental Quality Sensitive to Financial Funding Schemes? Evidence from a Marine Restoration Programme in the Black Sea," Working Papers 2011.38, Fondazione Eni Enrico Mattei.
    6. Bujosa Bestard, Angel & Riera Font, Antoni, 2021. "Attribute range effects: Preference anomaly or unexplained variance?," Journal of choice modelling, Elsevier, vol. 41(C).
    7. Ciccarone Giuseppe & Giuli Francesco & Marchetti Enrico, 2020. "Prospect Theory and sentiment-driven fluctuations," The B.E. Journal of Macroeconomics, De Gruyter, vol. 20(1), pages 1-25, January.
    8. Schaafsma, Marije & Brouwer, Roy & Rose, John, 2012. "Directional heterogeneity in WTP models for environmental valuation," Ecological Economics, Elsevier, vol. 79(C), pages 21-31.
    9. Ahtiainen, Heini & Pouta, Eija & Zawadzki, Wojciech & Tienhaara, Annika, 2023. "Cost vector effects in discrete choice experiments with positive status quo cost," Journal of choice modelling, Elsevier, vol. 47(C).
    10. Cristiano Franceschinis & Riccardo Scarpa & Mara Thiene & John Rose & Michele Moretto & Raffaele Cavalli, 2016. "Exploring the Spatial Heterogeneity of Individual Preferences for Ambient Heating Systems," Energies, MDPI, vol. 9(6), pages 1-19, May.
    11. Remoundou, Kyriaki & Kountouris, Yiannis & Koundouri, Phoebe, 2012. "Is the value of an environmental public good sensitive to the providing institution?," Resource and Energy Economics, Elsevier, vol. 34(3), pages 381-395.
    12. Hooper, Tara & Cooper, Philip & Hunt, Alistair & Austen, Melanie, 2014. "A methodology for the assessment of local-scale changes in marine environmental benefits and its application," Ecosystem Services, Elsevier, vol. 8(C), pages 65-74.
    13. Kyriaki Remoundou & Fikret Adaman & Phoebe Koundouri & Paulo Nunes, 2014. "Is the value of environmental goods sensitive to the public funding scheme? Evidence from a marine restoration programme in the Black Sea," Empirical Economics, Springer, vol. 47(4), pages 1173-1192, December.
    14. Tonin, Stefania, 2018. "Citizens’ perspectives on marine protected areas as a governance strategy to effectively preserve marine ecosystem services and biodiversity," Ecosystem Services, Elsevier, vol. 34(PB), pages 189-200.
    15. Tomas Badura & Silvia Ferrini & Michael Burton & Amy Binner & Ian J. Bateman, 2020. "Using Individualised Choice Maps to Capture the Spatial Dimensions of Value Within Choice Experiments," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 75(2), pages 297-322, February.
    16. Robert J. Johnston & Ewa Zawojska, 2020. "Relative Versus Absolute Commodity Measurements in Benefit Transfer: Consequences for Validity and Reliability," American Journal of Agricultural Economics, John Wiley & Sons, vol. 102(4), pages 1245-1270, August.
    17. Schaafsma, Marije & Brouwer, Roy & Liekens, Inge & De Nocker, Leo, 2014. "Temporal stability of preferences and willingness to pay for natural areas in choice experiments: A test–retest," Resource and Energy Economics, Elsevier, vol. 38(C), pages 243-260.
    18. Glenk, Klaus & Meyerhoff, Jürgen & Akaichi, Faical & Martin-Ortega, Julia, 2019. "Revisiting cost vector effects in discrete choice experiments," Resource and Energy Economics, Elsevier, vol. 57(C), pages 135-155.
    19. Robert J. Johnston & Ewa Zawojska, 2018. "Benefit Transfer and Commodity Measurement Scales: Consequences for Validity and Reliability," Working Papers 2018-26, Faculty of Economic Sciences, University of Warsaw.
    20. Lopez-Becerra, E.I. & Alcon, F., 2021. "Social desirability bias in the environmental economic valuation: An inferred valuation approach," Ecological Economics, Elsevier, vol. 184(C).
    21. Bujosa, Angel & Torres, Cati & Riera, Antoni, 2018. "Framing Decisions in Uncertain Scenarios: An Analysis of Tourist Preferences in the Face of Global Warming," Ecological Economics, Elsevier, vol. 148(C), pages 36-42.
    22. Marit Kragt, 2013. "The Effects of Changing Cost Vectors on Choices and Scale Heterogeneity," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 54(2), pages 201-221, February.

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    More about this item

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources

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