How to 'Sell' an Environmental Good: Using Labels to Investigate Scope Effects
Insufficient sensitivity to scope remains one of the pivots of criticism addressed at validity of stated preference methods. Many studies demonstrate failure of a scope test of some sort, while many others show that WTP responses are sensitive to the scope of environmental change. Despite some existing explanations and reasons for insensitivity to scope (embedding, warm glow, uncertainty over supply of a public good, awareness of all options) there seems to exist no clear conclusion on how to deal with it. The paper provides an alternative explanation for insufficient sensitivity to scope, based on redefinition of value drivers of environmental goods. In the proposed framework respondents' WTP need not depend only on physical characteristics of a valued good but may also partly be a function of a ‘label' under which the environmental good is ‘sold'. To investigate this problem and empirically test the hypothesis and its implications a CE study in a biodiversity valuation setting is designed and conducted. The conceptual framework and empirical evidence provide an alternative explanation for problems with the insufficient sensitivity to scope observed in many studies. Finally, we set out some implications of the nature of labels as value drivers for the design of future valuation studies.
|Date of creation:||Aug 2008|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +44 (0)1786 467473
Fax: +44 (0)1786 467469
Web page: http://www.econ.stir.ac.uk/
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bartczak, Anna & Lindhjem, Henrik & Navrud, Ståle & Zandersen, Marianne & Zylicz, Tomasz, 2008.
"Valuing forest recreation on the national level in a transition economy: The case of Poland,"
11483, University Library of Munich, Germany.
- Bartczak, Anna & Lindhjem, Henrik & Navrud, Ståle & Zandersen, Marianne & Zylicz, Tomasz, 2008. "Valuing forest recreation on the national level in a transition economy: The case of Poland," Forest Policy and Economics, Elsevier, vol. 10(7-8), pages 467-472, October.
- Timothy Park & John B. Loomis & Michael Creel, 1991. "Confidence Intervals for Evaluating Benefits Estimates from Dichotomous Choice Contingent Valuation Studies," Land Economics, University of Wisconsin Press, vol. 67(1), pages 64-73.
- Heberlein, Thomas A. & Wilson, Matthew A. & Bishop, Richard C. & Schaeffer, Nora Cate, 2005. "Rethinking the scope test as a criterion for validity in contingent valuation," Journal of Environmental Economics and Management, Elsevier, vol. 50(1), pages 1-22, July.
- Shiell, Alan & Gold, Lisa, 2002. "Contingent valuation in health care and the persistence of embedding effects without the warm glow," Journal of Economic Psychology, Elsevier, vol. 23(2), pages 251-262, April.
- Jette Jacobsen & John Boiesen & Bo Thorsen & Niels Strange, 2008. "What’s in a name? The use of quantitative measures versus ‘Iconised’ species when valuing biodiversity," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 39(3), pages 247-263, March.
- Knetsch, Jack L & Sinden, J A, 1984. "Willingness to Pay and Compensation Demanded: Experimental Evidence of an Unexpected Disparity in Measures of Value," The Quarterly Journal of Economics, MIT Press, vol. 99(3), pages 507-21, August.
- Brookshire, David S. & Ives, Berry C. & Schulze, William D., 1976. "The valuation of aesthetic preferences," Journal of Environmental Economics and Management, Elsevier, vol. 3(4), pages 325-346, December.
- Andreoni, James, 1989. "Giving with Impure Altruism: Applications to Charity and Ricardian Equivalence," Journal of Political Economy, University of Chicago Press, vol. 97(6), pages 1447-58, December.
- Roe, Brian E. & Haab, Timothy C., 2009. "Using Biomedical Technologies to Inform Economic Modeling: Challenges and Opportunities for Improving Analysis of Environmental Policies," 2009 Annual Meeting, July 26-28, 2009, Milwaukee, Wisconsin 49151, Agricultural and Applied Economics Association.
- Becker, Gary S, 1974.
"A Theory of Social Interactions,"
Journal of Political Economy,
University of Chicago Press, vol. 82(6), pages 1063-93, Nov.-Dec..
- Wiktor Adamowicz & Peter Boxall & Michael Williams & Jordan Louviere, 1998. "Stated Preference Approaches for Measuring Passive Use Values: Choice Experiments and Contingent Valuation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(1), pages 64-75.
- Olof Johansson-Stenman, 1998. "The Importance of Ethics in Environmental Economics with a Focus on Existence Values," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 11(3), pages 429-442, April.
- Carson, Richard T. & Hanemann, W. Michael, 2006. "Contingent Valuation," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 2, chapter 17, pages 821-936 Elsevier.
- Blamey, R. K. & Bennett, J. W. & Louviere, J. J. & Morrison, M. D. & Rolfe, J., 2000. "A test of policy labels in environmental choice modelling studies," Ecological Economics, Elsevier, vol. 32(2), pages 269-286, February.
- Chilton, Susan M. & Hutchinson, W. George, 1999. "Some Further Implications of Incorporating the Warm Glow of Giving into Welfare Measures: A Comment on the Use of Donation Mechanisms by Champet al," Journal of Environmental Economics and Management, Elsevier, vol. 37(2), pages 202-209, March.
- Cooper, Philip & Poe, Gregory L. & Bateman, Ian J., 2004. "The structure of motivation for contingent values: a case study of lake water quality improvement," Ecological Economics, Elsevier, vol. 50(1-2), pages 69-82, September.
- Richard Carson & Nicholas Flores & Norman Meade, 2001.
"Contingent Valuation: Controversies and Evidence,"
Environmental & Resource Economics,
European Association of Environmental and Resource Economists, vol. 19(2), pages 173-210, June.
- Carson, Richard T & Flores, Nicholas A, 2000. "Contingent Valuation: Controversies and Evidence," University of California at San Diego, Economics Working Paper Series qt75k752s7, Department of Economics, UC San Diego.
- Adamowicz, Wiktor L. & Boxall, Peter C. & Williams, Michael & Louviere, Jordan, 1995. "Stated Preference Approaches for Measuring Passive Use Values: Choice Experiments versus Contingent Valuation," Staff Paper Series 24126, University of Alberta, Department of Resource Economics and Environmental Sociology.
- Rolfe, John & Bennett, Jeff & Louviere, Jordan, 2000. "Choice modelling and its potential application to tropical rainforest preservation," Ecological Economics, Elsevier, vol. 35(2), pages 289-302, November.
- Peter A. Diamond & Jerry A. Hausman, 1994. "Contingent Valuation: Is Some Number Better than No Number?," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 45-64, Fall.
- Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132.
- Hensher, David A. & Greene, William H., 2002. "Specification and estimation of the nested logit model: alternative normalisations," Transportation Research Part B: Methodological, Elsevier, vol. 36(1), pages 1-17, January.
- McConnell, K. E., 1997. "Does Altruism Undermine Existence Value?," Journal of Environmental Economics and Management, Elsevier, vol. 32(1), pages 22-37, January.
- Gregory L. Poe & Kelly L. Giraud & John B. Loomis, 2005. "Computational Methods for Measuring the Difference of Empirical Distributions," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(2), pages 353-365.
- Carson Richard T. & Mitchell Robert Cameron, 1995. "Sequencing and Nesting in Contingent Valuation Surveys," Journal of Environmental Economics and Management, Elsevier, vol. 28(2), pages 155-173, March.
- Vuong, Quang H, 1989. "Likelihood Ratio Tests for Model Selection and Non-nested Hypotheses," Econometrica, Econometric Society, vol. 57(2), pages 307-33, March.
- Smith, V. Kerry & Osborne, Laura L., 1996. "Do Contingent Valuation Estimates Pass a "Scope" Test? A Meta-analysis," Journal of Environmental Economics and Management, Elsevier, vol. 31(3), pages 287-301, November.
- Hanemann, W. Michael, 1982. "Applied Welfare Analysis with Qualitative Response Models," Department of Agricultural & Resource Economics, UC Berkeley, Working Paper Series qt7982f0k8, Department of Agricultural & Resource Economics, UC Berkeley.
- Kahneman, Daniel & Knetsch, Jack L., 1992. "Valuing public goods: The purchase of moral satisfaction," Journal of Environmental Economics and Management, Elsevier, vol. 22(1), pages 57-70, January.
When requesting a correction, please mention this item's handle: RePEc:stl:stledp:2008-16. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Liam Delaney)
If references are entirely missing, you can add them using this form.