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What are the consequences of consequentiality?

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  • Herriges, Joseph
  • Kling, Catherine L.
  • Liu, Chih-Chen
  • Tobias, Justin

Abstract

We investigate the extent to which dichotomous choice referenda responses are shaped by whether the individual believes the survey itself will ultimately impact policy. Using survey data from the Iowa Lakes Project, we test this supposition. Specifically, we employ a Bayesian treatment effect model in which the degree of perceived consequentiality, measured as an ordinal response, is permitted to have a structural impact on willingness to pay (WTP) for a hypothetical environmental improvement. We test whether the estimated WTP distributions are the same for each value of the ordinal response.In our survey data, a subsample of individuals were randomly assigned supporting information suggesting that their responses to the questionnaires were important and will have an impact on policy decisions. In conjunction with a Bayesian posterior simulator, we use this source of exogenous variation to identify the structural impacts of consequentiality perceptions on willingness to pay, while controlling for the potential of confounding on unobservables. We find evidence consistent with a “knife-edge†result, namely that the willingness to pay distributions are equal among those believing the survey to be at least minimally consequential, and different for those believing that the survey is irrelevant for policy purposes.

Suggested Citation

  • Herriges, Joseph & Kling, Catherine L. & Liu, Chih-Chen & Tobias, Justin, 2010. "What are the consequences of consequentiality?," ISU General Staff Papers 201001010800001561, Iowa State University, Department of Economics.
  • Handle: RePEc:isu:genstf:201001010800001561
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    References listed on IDEAS

    as
    1. Koop,Gary & Poirier,Dale J. & Tobias,Justin L., 2007. "Bayesian Econometric Methods," Cambridge Books, Cambridge University Press, number 9780521671736, October.
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    6. Cummings, Ronald G, et al, 1997. "Are Hypothetical Referenda Incentive Compatible?," Journal of Political Economy, University of Chicago Press, vol. 105(3), pages 609-621, June.
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    8. Herriges, Joseph & Kling, Catherine & Liu, Chih-Chen & Tobias, Justin, 2010. "What are the consequences of consequentiality?," Journal of Environmental Economics and Management, Elsevier, vol. 59(1), pages 67-81, January.
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    11. Bulte, Erwin & Gerking, Shelby & List, John A. & de Zeeuw, Aart, 2005. "The effect of varying the causes of environmental problems on stated WTP values: evidence from a field study," Journal of Environmental Economics and Management, Elsevier, vol. 49(2), pages 330-342, March.
    12. Kai, Li, 1998. "Bayesian inference in a simultaneous equation model with limited dependent variables," Journal of Econometrics, Elsevier, vol. 85(2), pages 387-400, August.
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    JEL classification:

    • Q00 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - General

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