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Detecting Starting Point Bias in Dichotomous-Choice Contingent Valuation Surveys

Author

Listed:
  • Marcella Veronesi

    (University of Maryland)

  • Anna Alberini

    (University of Maryland and Fondazione Eni Enrico Mattei)

  • Joseph C. Cooper

    (The Resource and Rural Economics Division, Economic Research Service)

Abstract

We examine starting point bias in CV surveys with dichotomous choice payment questions and follow-ups, and double-bounded models of the WTP responses. We wish to investigate (1) the seriousness of the biases for the location and scale parameters of WTP in the presence of starting point bias; (2) whether or not these biases depend on the distribution of WTP and on the bids used; and (3) how well a commonly used diagnostic for starting point bias—a test of the null that bid set dummies entered in the right-hand side of the WTP model are jointly equal to zero—performs under various circumstances. Because starting point bias cannot be separately identified in any reliable manner from biases caused by model specification, we use simulation approaches to address this issue. Our Monte Carlo simulations suggest that the effect of ignoring starting point bias is complex and depends on the true distribution of WTP. Bid set dummies tend to soak up misspecifications in the distribution assumed by the researcher for the latent WTP, rather than capturing the presence of starting point bias. Their power in detecting starting point bias is low.

Suggested Citation

  • Marcella Veronesi & Anna Alberini & Joseph C. Cooper, 2005. "Detecting Starting Point Bias in Dichotomous-Choice Contingent Valuation Surveys," Working Papers 2005.119, Fondazione Eni Enrico Mattei.
  • Handle: RePEc:fem:femwpa:2005.119
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    References listed on IDEAS

    as
    1. Roberto LeÛn & Carmelo J. LeÛn, 2003. "Single or double bounded contingent valuation? A Bayesian test," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(2), pages 174-188, May.
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    Cited by:

    1. Mark J. Koetse & Erik T. Verhoef & Luke M. Brander, 2017. "A generic marginal value function for natural areas," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 58(1), pages 159-179, January.
    2. Kang, Heechan & Haab, Timothy C. & Interis, Matthew G., 2013. "Identifying inconsistent responses in dichotomous choice contingent valuation with follow-up questions," Resource and Energy Economics, Elsevier, vol. 35(3), pages 396-411.
    3. Alberto Longo & David Hoyos & Anil Markandya, 2015. "Sequence Effects in the Valuation of Multiple Environmental Programs Using the Contingent Valuation Method," Land Economics, University of Wisconsin Press, vol. 91(1), pages 20-35.
    4. Chin-Huang Huang & Chiung-Hsia Wang, 2015. "Estimating the Total Economic Value of Cultivated Flower Land in Taiwan," Sustainability, MDPI, Open Access Journal, vol. 7(4), pages 1-19, April.
    5. Frédéric Salladarré & Dorothée Brécard & Sterenn Lucas & Pierrick Ollivier, 2016. "Are French consumers ready to pay a premium for eco-labeled seafood products? A contingent valuation estimation with heterogeneous anchoring," Agricultural Economics, International Association of Agricultural Economists, vol. 47(2), pages 247-258, March.
    6. Bechtold, Kai-Brit & Abdulai, Awudu, 2012. "Willingness-To-Pay for Functional Dairy Products and the Influence of Starting Point Bias: Empirical Evidence for Germany," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124776, Agricultural and Applied Economics Association.
    7. Fiona Gibson & Michael Burton, 2014. "Salt or Sludge? Exploring Preferences for Potable Water Sources," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 57(3), pages 453-476, March.
    8. Cook, David & Davíðsdóttir, Brynhildur & Kristófersson, Daði Már, 2016. "Energy projects in Iceland – Advancing the case for the use of economic valuation techniques to evaluate environmental impacts," Energy Policy, Elsevier, vol. 94(C), pages 104-113.
    9. repec:kap:enreec:v:67:y:2017:i:3:d:10.1007_s10640-016-0028-0 is not listed on IDEAS
    10. repec:aen:journl:ej38-4-oseni is not listed on IDEAS
    11. Bechtold, Kai-Brit & Abdulai, Awudu, 2012. "Using Choice Experiments to Measure Consumers’ Preferences for Functional Dairy Products in Germany: Are Willingness-To-Pay Estimates Affected by Starting Point Bias?," 86th Annual Conference, April 16-18, 2012, Warwick University, Coventry, UK 135073, Agricultural Economics Society.
    12. Richard T. Carson & Miko_aj Czajkowski, 2014. "The discrete choice experiment approach to environmental contingent valuation," Chapters,in: Handbook of Choice Modelling, chapter 9, pages 202-235 Edward Elgar Publishing.
    13. repec:eee:renene:v:116:y:2018:i:pa:p:97-108 is not listed on IDEAS
    14. Michael Farmer & Clifford Lipscomb, 2008. "Conservative dichotomous choice responses in the active policy setting: DC rejections below WTP," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 39(3), pages 223-246, March.

    More about this item

    Keywords

    Anchoring; Dichotomous choice contingent valuation; Starting point bias; Double-bounded models; Estimation bias;

    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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