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Linking Revealed and Stated Preferences to Test External Validity

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  • Herriges, Joseph A.
  • Kling, Catherine L.
  • Azevedo, Christopher D.

Abstract

A new turn in the research agenda of environmental valuation is under way. Rather than treating stated preference (SP) and revealed preference (RP) as competing valuation techniques, analysts have begun to view them as complementary, where the strengths of each approach can be used to provide more precise and possibly more accurate benefit estimates. In this paper, we reexamine the models and motives for combining revealed and stated preference data. First, we note that because the different kinds of SP data contain different amounts of information, they may indicate different degrees of consistency with RP data. We also reconsider the interpretation of "consistent" or "inconsistent" findings of RP and SP data. We argue that while the conventional approach of treating the RP data as true and testing whether the SP data is consistent with it is intuitively appealing, this approach is based on the tenuous premise that the RP data generates unbiased welfare estimates. In particular, we propose three hypotheses for why the two data sources might be exhibiting inconsistency: (1) SP respondents ignore their budget constraint, (2) analysts inaccurately measure the price of recreation in RP data, and (3) SP respondents do not accurately understand the contingent market proposed by the analyst. Using these hypotheses in conjunction with the jointly estimated models, we test for the presence of these effects (using the alternative model as the basis of comparison).

Suggested Citation

  • Herriges, Joseph A. & Kling, Catherine L. & Azevedo, Christopher D., 1999. "Linking Revealed and Stated Preferences to Test External Validity," Hebrew University of Jerusalem Archive 18602, Hebrew University of Jerusalem.
    • Handle: RePEc:ags:hebarc:18602
    DOI: 10.22004/ag.econ.18602
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    Cited by:

    1. Jiang, Qi & Penn, Jerrod & Hu, Wuyang, 2022. "Real payment priming to reduce potential hypothetical bias," Journal of choice modelling, Elsevier, vol. 45(C).
    2. Haghani, Milad & Bliemer, Michiel C.J. & Rose, John M. & Oppewal, Harmen & Lancsar, Emily, 2021. "Hypothetical bias in stated choice experiments: Part I. Macro-scale analysis of literature and integrative synthesis of empirical evidence from applied economics, experimental psychology and neuroimaging," Journal of choice modelling, Elsevier, vol. 41(C).
    3. Xhakollari, Vilma & Asioli, Daniele & Nayga, Rodolfo M., 2025. "Mitigating hypothetical bias in choice Experiments: An in-depth review on the use of cheap talk," Journal of choice modelling, Elsevier, vol. 56(C).
    4. Joseph M. Little & Kristine M. Grimsrud & Patricia A. Champ & Robert P. Berrens, 2006. "Investigation of Stated and Revealed Preferences for an Elk Hunting Raffle," Land Economics, University of Wisconsin Press, vol. 82(4), pages 623-640.
    5. Fifer, Simon & Rose, John M., 2016. "Can you ever be certain? Reducing hypothetical bias in stated choice experiments via respondent reported choice certaintyAuthor-Name: Beck, Matthew J," Transportation Research Part B: Methodological, Elsevier, vol. 89(C), pages 149-167.
    6. Dietrich Earnhart, 2004. "Time is Money: Improved Valuation of Time and Transportation Costs," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 29(2), pages 159-190, October.
    7. Milad Haghani & Michiel C. J. Bliemer & John M. Rose & Harmen Oppewal & Emily Lancsar, 2021. "Hypothetical bias in stated choice experiments: Part II. Macro-scale analysis of literature and effectiveness of bias mitigation methods," Papers 2102.02945, arXiv.org.
    8. Christopher D. Azevedo & Joseph A. Herriges & Catherine L. Kling, 2000. "Ask a Hypothetical Question, Get a Valuable Answer?," Center for Agricultural and Rural Development (CARD) Publications 00-wp260, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    9. Milad Haghani & Michiel C. J. Bliemer & John M. Rose & Harmen Oppewal & Emily Lancsar, 2021. "Hypothetical bias in stated choice experiments: Part I. Integrative synthesis of empirical evidence and conceptualisation of external validity," Papers 2102.02940, arXiv.org.
    10. Haghani, Milad & Bliemer, Michiel C.J. & Rose, John M. & Oppewal, Harmen & Lancsar, Emily, 2021. "Hypothetical bias in stated choice experiments: Part II. Conceptualisation of external validity, sources and explanations of bias and effectiveness of mitigation methods," Journal of choice modelling, Elsevier, vol. 41(C).
    11. Marcia A. Rosado & Maria A. Cunha-e-Sa & Maria M. Ducla-Soares & Luis C. Nunes, 2000. "Combining averting behavior and contingent valuation data: an application to drinking water treatment," Nova SBE Working Paper Series wp392, Universidade Nova de Lisboa, Nova School of Business and Economics.
    12. Park, Timothy A. & Bowker, James Michael & Leeworthy, Vernon R., 2000. "Valuing Snorkeling Visits To The Florida Keys With Stated And Revealed Preference Models," Faculty Series 16713, University of Georgia, Department of Agricultural and Applied Economics.
    13. Bodo Steiner, 2004. "French Wines on the Decline? Econometric Evidence from Britain," Journal of Agricultural Economics, Wiley Blackwell, vol. 55(2), pages 267-288, July.

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