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Testing the stability of the Benefit Transfer Function for Discrete Choice Contingent Valuation Data

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Abstract

We examine the stability of the benefit transfer function across 42 recreational forests in the British Isles. A working definition of reliable function transfer is put forward, and a suitable statistical test is provided. The test is based on the sensitivity of the model log-likelihood to removal of individual forest recreation sites. We apply the proposed methodology on discrete choice contingent valuation data and find that a stable function improves our measure of transfer reliability, but not by much. We conclude that, in empirical studies on transferability, function stability considerations are secondary to the availability and quality of site attribute data. Modellers’ can study the advantages of transfer function stability vis-à-vis the value of additional information on recreation site attributes.

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  • David I. Matthews & Riccardo Scarpa & W. George Hutchinson, 2007. "Testing the stability of the Benefit Transfer Function for Discrete Choice Contingent Valuation Data," Working Papers in Economics 07/08, University of Waikato.
  • Handle: RePEc:wai:econwp:07/08
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    1. Scarpa, Riccardo & Chilton, Susan M. & Hutchinson, W. George & Buongiorno, Joseph, 2000. "Valuing the recreational benefits from the creation of nature reserves in Irish forests," Ecological Economics, Elsevier, vol. 33(2), pages 237-250, May.
    2. Ferrini, Silvia & Scarpa, Riccardo, 2007. "Designs with a priori information for nonmarket valuation with choice experiments: A Monte Carlo study," Journal of Environmental Economics and Management, Elsevier, vol. 53(3), pages 342-363, May.
    3. Jushan Bai & Pierre Perron, 1998. "Estimating and Testing Linear Models with Multiple Structural Changes," Econometrica, Econometric Society, vol. 66(1), pages 47-78, January.
    4. Dadi Kristofersson & Ståle Navrud, 2005. "Validity Tests of Benefit Transfer – Are We Performing the Wrong Tests?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 30(3), pages 279-286, March.
    5. Small, Kenneth A & Hsiao, Cheng, 1985. "Multinomial Logit Specification Tests," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 26(3), pages 619-627, October.
    6. Roberto Leon-Gonzalez & Riccardo Scarpa, 2007. "Robust Benefit Function Transfer: A Bayesian Model Averaging Approach," Discussion Papers in Economics 07/01, Department of Economics, University of Leicester.
    7. Scarpa, Riccardo & Hutchinson, W. George & Chilton, Susan M. & Buongiorno, Joseph, 2000. "Importance of forest attributes in the willingness to pay for recreation: a contingent valuation study of Irish forests," Forest Policy and Economics, Elsevier, vol. 1(3-4), pages 315-329, December.
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    Cited by:

    1. Longo, Alberto & Hutchinson, W. George & Hunter, Ruth F. & Tully, Mark A. & Kee, Frank, 2015. "Demand response to improved walking infrastructure: A study into the economics of walking and health behaviour change," Social Science & Medicine, Elsevier, vol. 143(C), pages 107-116.

    More about this item

    Keywords

    Benefit function transfer ; Function stability tests; Transfer reliability Forest recreation values; Contingent Valuation; Split sample;

    JEL classification:

    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities

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