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The Use of Hypothetical Baselines in Stated Preference Surveys

  • Whittington, Dale
  • Adamowicz, Wiktor

Researchers using stated preference (SP) techniques have increasingly come to rely on what we call “hypothetical baselines.” By this we mean that respondents are provided with a description of a current state, or baseline, but that this baseline is intentionally not the actual state of environmental quality, health, or other condition. The researcher then poses a valuation question or choice task that is contingent, not on the existing status quo, but rather on the state of the world described in this new hypothetical baseline. In this paper, we argue that researchers using SP techniques have often used hypothetical baselines without carefully considering the cognitive challenges this poses for respondents or the difficulties this practice creates for advising policymakers. We present a simple typology of four types of SP studies, two of which rely on hypothetical baselines, and give six examples of conditions that an SP researcher may change to create a hypothetical baseline. We discuss four main reasons why SP analysts use hypothetical baselines in their research designs, plus some of the risks associated with the use of hypothetical baselines. Finally, we offer guidance for the use of hypothetical baselines in future SP surveys.

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Paper provided by Resources For the Future in its series Discussion Papers with number dp-11-11-efd.

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Date of creation: 22 Dec 2011
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Handle: RePEc:rff:dpaper:dp-11-11-efd
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  1. Knetsch, Jack L. & Wong, Wei-Kang, 2009. "The endowment effect and the reference state: Evidence and manipulations," Journal of Economic Behavior & Organization, Elsevier, vol. 71(2), pages 407-413, August.
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  10. Boxall, Peter C. & Adamowicz, Wiktor L. & Moon, Amanda, 2009. "Complexity in choice experiments: choice of the status quo alternative and implications for welfare measurement," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 53(4), December.
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  12. Richard Carson & Robert Mitchell & Michael Hanemann & Raymond Kopp & Stanley Presser & Paul Ruud, 2003. "Contingent Valuation and Lost Passive Use: Damages from the Exxon Valdez Oil Spill," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 25(3), pages 257-286, July.
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  14. Samuelson, William & Zeckhauser, Richard, 1988. " Status Quo Bias in Decision Making," Journal of Risk and Uncertainty, Springer, vol. 1(1), pages 7-59, March.
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