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Plausible Responsiveness to Scope in Contingent Valuation

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  • John C. Whitehead

Abstract

We consider the question of economic significance, relative to statistical significance, of the scope test in contingent valuation. We review the history of the scope test in order to gain insights into how the issue of scope “adequacy” arose twenty years after it was first mentioned by the NOAA Panel on Contingent Valuation. We argue that the adding-up test is a useful test of the internal consistency of the contingent valuation method but it is flawed in concept since it requires an ex-post counterfactual scenario, it raises the cost and it does not provide a measure of economic significance. We then provide a review of Desvousges, Mathews and Train (2012) who promote the adding-up test as a measure of adequacy to the exclusion of other more obvious measures. We propose scope elasticity of willingness to pay as a more appropriate way of measuring scope plausibility. We review the literature for examples of scope elasticity and find two recent studies that provide this summary statistic. Then we provide two empirical examples to show the ease of implementation of scope elasticity and its interpretation. Key Words: Contingent Valuation Method; scope test

Suggested Citation

  • John C. Whitehead, 2015. "Plausible Responsiveness to Scope in Contingent Valuation," Working Papers 15-07, Department of Economics, Appalachian State University, revised 2016.
  • Handle: RePEc:apl:wpaper:15-07
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    Cited by:

    1. Klaus Glenk & Robert J. Johnston & Jürgen Meyerhoff & Julian Sagebiel, 2020. "Spatial Dimensions of Stated Preference Valuation in Environmental and Resource Economics: Methods, Trends and Challenges," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 75(2), pages 215-242, February.
    2. Alaya Spencer‐Cotton & Marit E. Kragt & Michael Burton, 2018. "Spatial and Scope Effects: Valuations of Coastal Management Practices," Journal of Agricultural Economics, Wiley Blackwell, vol. 69(3), pages 833-851, September.
    3. Qiang Wang & Thomas Dogot & Guosheng Wu & Xianlei Huang & Changbin Yin, 2019. "Residents’ Willingness for Centralized Biogas Production in Hebei and Shandong Provinces," Sustainability, MDPI, Open Access Journal, vol. 11(24), pages 1-16, December.
    4. Bishop, Richard C., 2018. "Warm Glow, Good Feelings, and Contingent Valuation," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 43(3), September.
    5. Lim, Seul-Ye & Kim, Hyo-Jin & Yoo, Seung-Hoon, 2018. "Household willingness to pay for expanding fuel cell power generation in Korea: A view from CO2 emissions reduction," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P1), pages 242-249.
    6. Catherine L. Kling & Daniel J. Phaneuf, 2018. "How are Scope and Adding up Relevant for Benefits Transfer?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 69(3), pages 483-502, March.
    7. Ho-Young Kim & So-Yeon Park & Seung-Hoon Yoo, 2016. "Public Acceptability of Introducing a Biogas Mandate in Korea: A Contingent Valuation Study," Sustainability, MDPI, Open Access Journal, vol. 8(11), pages 1-16, October.
    8. Peter A. Groothuis & Tanga A. Mohr & John C. Whitehead & Kristan A. Cockerill & William P. Anderson, Jr. & Chuanhui Gu, "undated". "The Influence of Scientific Information on the Willingness to Pay for Stormwater Runoff Abatement," Working Papers 17-05, Department of Economics, Appalachian State University.
    9. Koto, Prosper Senyo & Yiridoe, Emmanuel K., 2019. "Expected willingness to pay for wind energy in Atlantic Canada," Energy Policy, Elsevier, vol. 129(C), pages 80-88.
    10. Peter A. Groothuis & Tanga M. Mohr & John C. Whitehead & Kristan Cockerill & William P. Anderson, Jr. & Chuanhui Gu, 2020. "Measuring the Direct and Indirect Effect of Scientific Information On Valuing Stormwater Management Programs: A Hybrid Choice Model," Working Papers 20-02, Department of Economics, Appalachian State University.
    11. John C. Whitehead, 2016. "A Comment on “An Adding Up Test on Contingent Valuations of River and Lake Quality”," Working Papers 17-01, Department of Economics, Appalachian State University.
    12. Moeltner, Klaus, 2019. "Bayesian nonlinear meta regression for benefit transfer," Journal of Environmental Economics and Management, Elsevier, vol. 93(C), pages 44-62.
    13. Skeie, Magnus Aa. & Lindhjem, Henrik & Skjeflo, Sofie & Navrud, Ståle, 2019. "Smartphone and tablet effects in contingent valuation web surveys – No reason to worry?," Ecological Economics, Elsevier, vol. 165(C), pages 1-1.
    14. Balmford, Ben & Bateman, Ian J. & Bolt, Katherine & Day, Brett & Ferrini, Silvia, 2019. "The value of statistical life for adults and children: Comparisons of the contingent valuation and chained approaches," Resource and Energy Economics, Elsevier, vol. 57(C), pages 68-84.

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