Benefit Transfer and Commodity Measurement Scales: Consequences for Validity and Reliability

Non-market goods can be measured on cardinal or relative scales. Consider a marsh of two hundred acres, of which twenty acres would be affected by a policy. The same affected area can be measured in cardinal terms (twenty acres) or as a relative proportion (ten percent of the marsh). This seemingly inconsequential transformation can have significant implications for benefit transfer across sites—a simple observation that remains unacknowledged by the literature. This article provides the first theoretical and empirical evaluation of variable measurement conventions within benefit transfer, deriving conditions under which different types of measurement scales are expected to enhance validity and reliability. Theoretical results are illustrated using an application of discrete choice experiments to coastal flood adaptation in two Connecticut (USA) communities. Empirical findings validate expectations from the theoretical model, with both suggesting that transfers over goods measured in relative units may substantially outperform transfers over goods measured in cardinal units.