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A Sample Selection Model for Protest Non-Response Votes in Contingent Valuation Analyses

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  • P. Calia
  • E. Strazzera

Abstract

pay some money for a public good, for reasons that differ from a genuine indifference to the good. For example, some people may dislike the idea of placing monetary values to public goods like the environment or a historical monument. Some may protest against the inefficiency of the public administration in managing public funds, and refuse to pay a tax. Others may behave strategically, if they think that their answer could influence the actual level of taxation. A good survey design can effectively reduce them, but protest votes can hardly be completely removed from the dataset. The question is how to deal with them. Sometimes they are considered as true zero values, or, if the dichotomous choice method is used, as if they were below the minimum bid. Obviously, if the unwillingness to pay reflects only a protest and not a low or null valuation of the good, this procedure results in downward biased estimates of the wtp measure. It is of paramount importance that the questionnaire contains a follow up question for individuals that refuse payment, to investigate about their motivations, and interpret the responses. Alternatively, observations with protest votes are simply cut off the sample, and only the subsample with positive reservation prices is considered in the analysis. This procedure will not have any effect for the validity of the estimates only if there is no sample selection bias. Otherwise, it leads to incorrect estimates for the willingness to pay. In this paper we present a sample selection model that allows to take into account, and correct, the possible bias due to protest votes. It is shown that selection bias can sensibly affect the estimates for the willingness to pay for the public good. It will be seen that the model may present estimation problems because of flatness of the likelihood function. In some cases confidence intervals around the sample selection coefficient are too wide to give evidence of presence or absence of sample selection bias. It is argued that even in these circumstances the sample selection model with the protest votes should be preferred to the model without protest votes, since it takes into account the uncertainty about the estimates of the willingness to pay.

Suggested Citation

  • P. Calia & E. Strazzera, 1999. "A Sample Selection Model for Protest Non-Response Votes in Contingent Valuation Analyses," Working Paper CRENoS 199905, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    • Handle: RePEc:cns:cnscwp:199905
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    References listed on IDEAS

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    1. Howe, Charles W & Lee, Byung-Joo & Bennett, Lynne L, 1994. "Design and Analysis of Contingent Valuation Surveys Using the Nested Tobit Model," The Review of Economics and Statistics, MIT Press, vol. 76(2), pages 385-389, May.
    2. Trudy Ann Cameron, 1991. "Interval Estimates of Non-Market Resource Values from Referendum Contingent Valuation Surveys," Land Economics, University of Wisconsin Press, vol. 67(4), pages 413-421.
    3. Lee, Byung-Joo, 1992. "A nested Tobit analysis for a sequentially censored regression model," Economics Letters, Elsevier, vol. 38(3), pages 269-273, March.
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    1. M. Musumeci, 2000. "Innovazione tecnologica e beni culturali. Uno studio sulla situazione della Sicilia," Working Paper CRENoS 200008, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    2. John E. Ataguba & Hyacinth E. Ichoku & William M. Fonta, 2008. "Estimating the willingness to pay for community healthcare insurance in rural Nigeria," Working Papers PMMA 2008-10, PEP-PMMA.
    3. Giles Atkinson & Sian Morse-Jones & Susana Mourato & Allan Provins, 2012. "‘When to Take “No” for an Answer’? Using Entreaties to Reduce Protests in Contingent Valuation Studies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 51(4), pages 497-523, April.
    4. Brouwer, Roy & Martín-Ortega, Julia, 2012. "Modeling self-censoring of polluter pays protest votes in stated preference research to support resource damage estimations in environmental liability," Resource and Energy Economics, Elsevier, vol. 34(1), pages 151-166.
    5. Madureira, Lívia & Nunes, Luis C. & Borges, José G. & Falcão, André O., 2011. "Assessing forest management strategies using a contingent valuation approach and advanced visualisation techniques: A Portuguese case study," Journal of Forest Economics, Elsevier, vol. 17(4), pages 399-414.
    6. Geta, Endrias & Mezgebo, Alem & Zeleke, Fresenbet, 2015. "Economic valuation of improved management of Dechatu drainage basin in Dire Dawa Administration, Ethiopia," Studies in Agricultural Economics, Research Institute for Agricultural Economics, vol. 117(3), pages 1-8, December.
    7. R. Naylor, 2001. "Firm profits and the number of firms under unionised oligopoly," Working Paper CRENoS 200109, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    8. Salvador Saz-Salazar & Miguel A. García-Rubio & Francisco González-Gómez & Andrés J. Picazo-Tadeo, 2016. "Managing Water Resources Under Conditions of Scarcity: On Consumers’ Willingness to Pay for Improving Water Supply Infrastructure," Water Resources Management: An International Journal, Published for the European Water Resources Association (EWRA), Springer;European Water Resources Association (EWRA), vol. 30(5), pages 1723-1738, March.
    9. William Fonta & Hyacinth Ichoku & Kanayo Ogujiuba, 2010. "Estimating willingness to pay with the stochastic payment card design: further evidence from rural Cameroon," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 12(2), pages 179-193, April.
    10. C. Antonelli & R. Marchionatti & S. Usai, 2000. "Productivity and External Knowledge: The Italian Case," Working Paper CRENoS 200009, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    11. Chuanwang Sun & Nan Lyu & Xiaoling Ouyang, 2014. "Chinese Public Willingness to Pay to Avoid Having Nuclear Power Plants in the Neighborhood," Sustainability, MDPI, vol. 6(10), pages 1-27, October.
    12. E. Strazzera & R. Scarpa & P. Calia & G. Garrod & K. Willis, 2000. "Modelling zero bids in contingent valuation surveys," Working Paper CRENoS 200006, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    13. Tan, Ruipeng & Lin, Boqiang, 2019. "Public perception of new energy vehicles: Evidence from willingness to pay for new energy bus fares in China," Energy Policy, Elsevier, vol. 130(C), pages 347-354.
    14. Cho, Seong-Hoon & Yen, Steven T. & Bowker, J.M. & Newman, David H., 2008. "Modeling Willingness to Pay for Land Conservation Easements: Treatment of Zero and Protest Bids and Application and Policy Implications," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 40(1), pages 267-285, April.
    15. Rong-Chang Jou & Tzu-Ying Chen, 2015. "Willingness to Pay of Air Passengers for Carbon-Offset," Sustainability, MDPI, vol. 7(3), pages 1-15, March.
    16. LR. Keller & E. Strazzera, 2000. "Examining predictive models among discounting models," Working Paper CRENoS 200005, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    17. Rodelio Subade & Evelyn Jugado, 2010. "Economic Valuation of Conserving Endangered Species and Their Habitats in the North West Panay Peninsula, Central Philippines," EEPSEA Special and Technical Paper tp201010t1, Economy and Environment Program for Southeast Asia (EEPSEA), revised Oct 2010.
    18. Elisabetta Strazzera & Margarita Genius & Riccardo Scarpa & George Hutchinson, 2003. "The Effect of Protest Votes on the Estimates of WTP for Use Values of Recreational Sites," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 25(4), pages 461-476, August.
    19. Mosi Rosenboim & Tal Shavit, 2012. "Whose money is it anyway? Using prepaid incentives in experimental economics to create a natural environment," Experimental Economics, Springer;Economic Science Association, vol. 15(1), pages 145-157, March.
    20. R. Naylor, 2001. "Industry profits and market size under bilateral oligopoly," Working Paper CRENoS 200108, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    21. Elisabetta Strazzera & Riccardo Scarpa & Pinuccia Calia & Guy Garrod & Kenneth Willis, 2003. "Modelling zero values and protest responses in contingent valuation surveys," Applied Economics, Taylor & Francis Journals, vol. 35(2), pages 133-138.
    22. MEZGEBO, Alem & GETA, Endrias & ZELEKE, Fresenbet, 2016. "Urban Freshwater Users Willingness To Pay For Upland Degraded Watershed Management: The Case Of Dechatu In Dire Dawa Administration, Ethiopia," Review of Agricultural and Applied Economics (RAAE), Faculty of Economics and Management, Slovak Agricultural University in Nitra, vol. 19(1), pages 1-8, March.
    23. Raut, Nirmal Kumar & Shrestha, Devendra Prasad, 2011. "Why Low Adult Immunization? An inquiry into the case of Hepatitis B Vaccine in the Peri-Urban Areas of Kathmandu Valley," MPRA Paper 61711, University Library of Munich, Germany, revised Jan 2015.

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