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Does Specification Error Explain the Discrepancy Between Open-Ended and Dichotomous Choice Contigent Valuation Responses? A Comment on "Monte Carlo Benchmarks for Discrete Valuation Methods" by Ju-Chin Huang and V. Kerry Smith

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  • Poe, Gregory L.
  • Vossler, Christian A.

Abstract

In this working paper we demonstrate that some of the statistical tests used by Huang and Smith in a recent Land Economics article (74(2 1998): 186-202) were erroneous, and raise concerns about their corresponding conclusions. Specifically, using data from one of the studies that they showcase, we demonstrate that Huang and Smith’s analysis suggesting statistical equality between hypothetical dichotomous choice responses and actual contributions is incorrect. We further show that their purported equality between dichotomous choice and open-ended response formats is unfounded. Based on these analyses we conclude that when real humans make real or stated decisions, the observed procedural variance across elicitation methods and the degree of hypothetical bias are more fundamental than relying on alternative econometric specifications.

Suggested Citation

  • Poe, Gregory L. & Vossler, Christian A., 2001. "Does Specification Error Explain the Discrepancy Between Open-Ended and Dichotomous Choice Contigent Valuation Responses? A Comment on "Monte Carlo Benchmarks for Discrete Valuation Methods"," Working Papers 127665, Cornell University, Department of Applied Economics and Management.
  • Handle: RePEc:ags:cudawp:127665
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    File URL: http://purl.umn.edu/127665
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    References listed on IDEAS

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    1. Haab, Timothy C. & McConnell, Kenneth E., 1997. "Referendum Models and Negative Willingness to Pay: Alternative Solutions," Journal of Environmental Economics and Management, Elsevier, vol. 32(2), pages 251-270, February.
    2. Timothy Park & John B. Loomis & Michael Creel, 1991. "Confidence Intervals for Evaluating Benefits Estimates from Dichotomous Choice Contingent Valuation Studies," Land Economics, University of Wisconsin Press, vol. 67(1), pages 64-73.
    3. Edward Balistreri & Gary McClelland & Gregory Poe & William Schulze, 2001. "Can Hypothetical Questions Reveal True Values? A Laboratory Comparison of Dichotomous Choice and Open-Ended Contingent Values with Auction Values," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 18(3), pages 275-292, March.
    4. Bengt Kristrom, 1990. "A Non-Parametric Approach to the Estimation of Welfare Measures in Discrete Response Valuation Studies," Land Economics, University of Wisconsin Press, vol. 66(2), pages 135-139.
    5. Ju-Chin Huang & V. Kerry Smith, 1998. "Monte Carlo Benchmarks for Discrete Response Valuation Methods," Land Economics, University of Wisconsin Press, vol. 74(2), pages 186-202.
    6. Timothy C. Haab & Kenneth E. McConnell, 1998. "Referendum Models and Economic Values: Theoretical, Intuitive, and Practical Bounds on Willingness to Pay," Land Economics, University of Wisconsin Press, vol. 74(2), pages 216-229.
    7. Welsh, Michael P. & Poe, Gregory L., 1998. "Elicitation Effects in Contingent Valuation: Comparisons to a Multiple Bounded Discrete Choice Approach," Journal of Environmental Economics and Management, Elsevier, vol. 36(2), pages 170-185, September.
    8. Richard C. Ready & Dayuan Hu, 1995. "Statistical Approaches to the Fat Tail Problem for Dichotomous Choice Contingent Valuation," Land Economics, University of Wisconsin Press, vol. 71(4), pages 491-499.
    9. Champ, Patricia A. & Bishop, Richard C. & Brown, Thomas C. & McCollum, Daniel W., 1997. "Using Donation Mechanisms to Value Nonuse Benefits from Public Goods," Journal of Environmental Economics and Management, Elsevier, vol. 33(2), pages 151-162, June.
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    Keywords

    Research Methods/ Statistical Methods;

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