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Cognitive Ability and Scale Bias in the Contingent Valuation Method - An Analysis of Willingness to Pay to Reduce Mortality Risks

Author

Listed:
  • Svensson, Mikael

    (Department of Business, Economics, Statistics and Informatics)

  • Andersson, Henrik

    (Department of Transport Economics)

Abstract

This study investigates whether or not the scale bias found in contingent valuation (CVM) studies on mortality risk reductions is a result of cognitive restraints among respondents. Scale bias refers to insensitivity and non near-proportionality of the respondents' willingness to pay (WTP) to the size of the risk reduction. Two hundred Swedish students participated in an experiment where their cognitive ability was tested before they took part in a CVM-study where they were asked about their WTP to reduce bus-mortality risk. The results imply that WTP answers from respondents with a higher cognitive ability are less flawed by scale bias.

Suggested Citation

  • Svensson, Mikael & Andersson, Henrik, 2006. "Cognitive Ability and Scale Bias in the Contingent Valuation Method - An Analysis of Willingness to Pay to Reduce Mortality Risks," Working Papers 2006:7, Örebro University, School of Business, revised 12 Feb 2007.
    • Handle: RePEc:hhs:oruesi:2006_007
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    More about this item

    Keywords

    Cognitive Ability; Contingent Valuation; Mortality Risk; Near-Proportionality; Scale Bias;
    All these keywords.

    JEL classification:

    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General
    • I10 - Health, Education, and Welfare - - Health - - - General
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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