Cameron, T. A., and D. D. Huppert (1991) “Referendum Contingent Valuation Estimates: Sensitivity to the Assignment of Offered Values,” Journal of the American Statistical Association, 86 (416), 910-18.
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Dharmaratne, G. S., F. Y. Sang, et al. (2000). “Tourism potentials for financing protected areas.” Annals of Tourism Research 27(3): 590-610.
Establishment of protected areas is becoming a major avenue for conservation and preservation of the environment. However, due to the inability to self-finance, many protected areas have become "paper parks". Tourism could be a major source of revenue, especially in developing countries, for self-financing of protected areas, through the recovery of use and nonuse values. This paper estimates the use and nonuse values of two protected areas, a marine and a proposed terrestrial park and examines the possibilities of recovering these values from tourists. The results shaw use values could provide a substantial source of income while nonuse Values could also be significant, but would depend on the nature of the protected area. Keywords: use value, nonuse value, contingent valuation method, marine parks, terrestrial parks, protected areas. (C) 2000 Elsevier Science Ltd. All rights reserved.
McFadden, D. (1999). “Rationality for economists?” Journal of Risk and Uncertainty 19(1-3): 73-105.
Rationality is a complex behavioral theory that can be parsed into statements about preferences, perceptions, and process. This paper looks at the evidence on rationality that is provided by behavioral experiments, and argues that most cognitive anomalies operate through errors in perception that arise from the way information is stored, retrieved, and processed, or through errors in process that lead to formulation of choice problems as cognitive tasks that are inconsistent at least with rationality narrowly defined. The paper discusses how these cognitive anomalies influence economic behavior and measurement, and their implications for economic analysis.
Reaves, D. W., R. A. Kramer, et al. (1999). “Does question format matter? Valuing an endangered species.” Environmental & Resource Economics 14(3): 365-383.
A three-way treatment design is used to compare contingent valuation response formats. Respondents are asked to value an endangered species (the red-cockaded woodpecker) and the restoration of its habitat following a natural disaster. For three question formats (open-ended, payment card, and double- bounded dichotomous choice), differences in survey response rates, item non-response rates, and protest bids are examined. Bootstrap techniques are used to compare means across formats and to explore differences in willingness to pay (WTP) distribution functions. Convergent validity is found in a comparison of mean WTP values, although some differences are apparent in the cumulative distribution functions. Differences across formats are also identified in item non-response rates and proportion of protest bids. Overall, the payment card format exhibits desirable properties relative to the other two formats.
Breffle, W. S., E. R. Morey, and T. S. Lodder (1998) “Using contingent valuation to estimate a neighbourhood's willingness to pay to preserve undeveloped urban land,” Urban Studies, 35 (4), 715-727.
Contingent valuation (CV) is used to estimate a neighbourhood's willingness to pay (WTP) to preserve a 5.5-acre parcel of undeveloped land in Boulder, Colorado, that provides views, open space and wildlife habitat. Households were surveyed to determine bounds on their WTP for preservation. An interval model is developed to estimate sample WTP as a function of distance, income and other characteristics. The model accommodates individuals who might be made better off by development and addresses the accumulation of WTP responses at zero. Weighted sample WTP estimates are aggregated to obtain the neighbourhood's WTP, This application demonstrates that contingent valuation is a flexible policy tool for land managers and community groups wanting to estimate WTP to preserve undeveloped urban land.
Green, D., et al. (1998) “Referendum contingent valuation, anchoring, and willingness to pay for public goods,” Resource and Energy Economics, 20 (2), 85-116.
This study reports on experiments that examine anchoring in single referendum questions in contingent valuation surveys on willingness to pay for public goods, and on objective estimation. Strong anchoring effects are found that lead to systematically higher estimated mean responses from Yes/No referendum responses than from open-ended responses. This response pattern is similar for contingent valuation questions and for objective estimation questions. The paper concludes that psychometric anchoring effects, rather than incentive effects, are the likely cause of results commonly found in contingent valuation studies, and that the currently popular single referendum elicitation format is highly vulnerable to anchoring. (C) 1998 Elsevier Science B.V.
Huang, J. C., and V. K. Smith (1998) “Monte Carlo benchmarks for discrete response valuation methods,” Land Economics, 74 (2), 186-202.
This paper argues that the belief that discrete contingent valuation (CV) questions yield substantially larger estimates of the mean (and the median) willingness to pay (WTP) for nonmarket resources in comparison to open-ended CV questions is unfounded Monte Carlo experiments estimate the factors influencing the performance of WTP estimates based on discrete response models. Most of the en.or arises from the specification errors common to the empirical models in the literature. These experiments suggest models where WTP is dominated by nonuse (or passive use) values are likely to have smaller errors than where large use values influence these decisions.
Sagoff, M. (1998) “Aggregation and deliberation in valuing environmental public goods: A look beyond contingent pricing,” Ecological Economics, 24 (2-3), 213-230.
Starting from a distinction between Kantian (principle-based) and utilitarian (preference-based) approaches in political theory, this essay argues that we may understand normative judgments individuals make about policy to express principled views of the public interest or purpose not private preferences about their own consumption opportunities. These judgments, in other words, state opinions about what we ought to do as a society rather than into account these kinds of judgments-which dominate public discourse about the environment-only if it moves toward a deliberative, discursive, jury-like research method emphasizing informed discussion leading toward a consensus based on an argument about the public interest. (C) 1998 Elsevier Science B.V.
Loomis, J., and E. Ekstrand (1997) “Economic benefits of critical habitat for the Mexican spotted owl: A scope test using a multiple-bounded contingent valuation survey,” Journal of Agricultural and Resource Economics, 22 (2), 356-366.
A split-sample design is used to test for a difference between mean willingness to pay (WTP) for protecting the Mexican spotted owl versus protecting 62 threatened/endangered species which includes the Mexican spotted owl. The multiple-bounded contingent valuation method is used in a mail survey of U.S. residents. The mean WTP amounts are statistically different at the 0.1 confidence level indicating the multiple-bounded mail survey passes the scope test. The range of estimated benefits of preserving the 4.6 million acres of critical habitat for the Mexican spotted owl substantially outweighs the costs of the recovery effort.
Haab, T. C., and K. E. McConnell (1997) “Referendum models and negative willingness to pay: Alternative solutions,” Journal of Environmental Economics and Management, 32 (2), 251-270.
Traditional referendum models of contingent valuation with linear utility functions and additive errors have troubled researchers because they routinely predict negative willingness to pay. We explore solutions to this problem, including parametric models and the Turnbull empirical distribution estimator of willingness to pay exploited by Carson et al. We show that there are closed form solutions for estimates of the empirical distribution function from the Turnbull likelihood maximization problem which correspond to the self-consistency algorithm proposed by Turnbull and the pooled adjacent violators algorithm (PAVA) described by Robertson, Wright, and Dykstra and implemented by Kristrom (Land Econom. 66, 135-139 (1990)). Further, a lower bound estimate of willingness to pay and the associated variance can be calculated by hand. The Turnbull estimator solves the problem of estimating negative willingness to pay without resorting to ad hoc distribution assumptions. It is shown that central tendency measures of willingness to pay from parametric models are sensitive to the assumed distribution, while the lower bound Turnbull estimate is robust across distributions. (C) 1997 Academic Press.
Chestnut, L. G., et al. (1996) “Measuring heart patients' willingness to pay for changes in angina symptoms,” Medical Decision Making, 16 (1), 65-77.
Willingness-to-pay (WTP) measures of the effects of changes in health on a person's welfare are more comprehensive than traditional cost-of-illness (COI) measures, but they are sometimes difficult to obtain. The authors investigated two approaches for measuring heart patients' WTP for changes in their angina symptoms. First, actual expenditures and perceived angina episodes avoided were used to infer an averting-behavior measurement of WTP. Second, a contingent-valuation approach was used to ask direct WTP questions regarding a hypothetical medical treatment that could be purchased to avoid additional angina episodes. The results indicated that although negligible COI changes were expected with small changes in angina frequency, the subjects had significant WTP to avoid increases in angina. The average WTP to avoid additional angina episodes revealed by the averting-behavior questions was comparable to the directly-elicited WTP, providing a test of the validity of the contingent-valuation approach.
Boyle, K. J., et al. (1996) “Valuing public goods: Discrete versus continuous contingent- valuation responses,” Land Economics, 72 (3), 381-396.
Independent applications of open-ended and dichotomous-choice formats are compared using tests of means, estimating joint likelihood functions and nonparametric tests of distributions. The null hypothesis of no difference in the open-ended and dichotomous-choice estimates of central tendency cannot be rejected for two out of three data sets, while estimated standard deviations are significantly different for all three data sets. In addition, actual dichotomous-choice means and standard deviations exceed those from comparable synthetic dichotomous-choice data sets, suggesting either open-ended questions underestimate values or dichotomous-choice bid structures may lead to systematic overestimates.
Shabman, L., and K. Stephenson (1996) “Searching for the correct benefit estimate: Empirical evidence for an alternative perspective,” Land Economics, 72 (4), 433-449.
This paper contrasts the results of the contingent valuation hedonic price, and property damages avoided valuation techniques. Each technique was used to estimate the value of flood risk reduction from the construction of a flood control project. Voting behavior in a referendum called specifically for the provision of the project was used to further interpret the results from the three valuation studies. Substantial differences were found between the estimates. In explaining these differences an alternative perspective on the current debate over the validity and accuracy of nonmarket value estimates is offered.
Ready, R. C., J. C. Buzby, and D. Y. Hu (1996) “Differences between continuous and discrete contingent value estimates,” Land Economics, 72 (3), 397-411.
In a split-sample contingent valuation study of willingness to pay (WTP) for food safety improvements, the dichotomous choice (DC) elicitation method consistently generated much larger estimates of WTP than did a continuous method. Little or none of these differences was due to bias introduced by the statistical techniques used with the DC data. Most or all of the difference was due to differences in respondent behavior. In addition, the continuous WTP responses showed a significant scope effect while the DC responses did not. The observed difference in behavior may be attributable in part to yea- saying by DC respondents.
Alberini, A. (1995) “Testing Willingness-to-Pay Models of Discrete-Choice Contingent Valuation Survey Data,” Land Economics, 71 (1), 83-95.
This paper considers models of willingness to pay (WTP) based on dichotomous choice contingent valuation survey data and examines the effect of the survey design on tests of goodness of fit. Simulations show that eliciting single binary responses result in tests that have low power in detecting departures from the maintained distribution of WTP, unless the sample size is truly large. The power of the tests improves if a follow-up question and a moderate number of sets of bid values are used, and if the bids are not placed on the extreme tails of the WTP distribution.
Alberini, A. (1995) “Optimal Designs For Discrete-Choice Contingent Valuation Surveys - Single-Bound, Double-Bound, and Bivariate Models,” Journal of Environmental Economics and Management, 28 (3), 287-306.
This paper finds the designs for discrete-choice contingent valuation surveys which maximize the precision of a statistic of interest about the public's willingness to pay (WTP) for a change in the environmental quality, such as median WTP. An optimization problem is set up, in which the efficiency of the estimate of median WTP (or a related concept) is the objective function to optimize with respect to the survey design (i.e., the set of bids offered to the respondents). In deriving the optimal designs, we consider alternative econometric models, such as the basic ''single-bound'' model that uses the responses to the first payment question, the traditional interval-data (or ''double-bound'') model for surveys with a follow-up payment question, and the recently proposed bivariate binary response model. Simulations are carried out to compare the alternative design principles and assess their performances with respect to the statistic of primary interest, median WTP, and other welfare measures, such as mean WTP. Other designs that are constructed ad hoc are also examined. (C) 1995 Academic Press, Inc.
Elnagheeb, A. H., and J. L. Jordan (1995) “Comparing 3 Approaches That Generate Bids For the Referendum Contingent Valuation Method,” Journal of Environmental Economics and Management, 29 (1), 92-104.
Two Monte Carlo willingness-to-pay (UTP) models were constructed to compare three approaches that generate bids for the referendum CVM. In the first model, WTP was normally distributed, and in the second, was lognormally distributed. The bid approaches were those of K. L. Boyle, M. P. Welsh, and R. C. Bishop, (Land Econom. 64, 94-98, 1988), J. C. Cooper (J. Environ. Econom. Management 24, 25-40, 1993), and an ad hoc third approach. Some properties of these approaches were discussed. WTP estimates from the three approaches were compared to the true value. Results indicated that Boyle et al.'s approach was preferred, especially when variation in WTP was low. Estimates from the three approaches became more comparable as WTP variability and sample size increased. (C) 1995 Academic Press, Inc.
Holmes, T. P., and R. A. Kramer (1995) “An Independent Sample Test of Yea-Saying and Starting Point Bias in Dichotomous-Choice Contingent Valuation,” Journal of Environmental Economics and Management, 29 (1), 121-132.
We developed several diagnostic tools to test the convergent validity of two common contingent valuation elicitation procedures. Data were collected from independent samples receiving dichotomous choice and payment card questions. We compared actual with counterfactual responses using deterministic and Monte Carlo methods and we found that WTP distributions and mean values varied by the value elicitation method. We also developed a paired-comparison test for procedure variance which indicated that yea-saying and starting point bias influenced dichotomous choice responses. (C) 1995 Academic Press. Inc.
Jordan, J. L., and A. H. Elnagheeb (1994) “Differences in Contingent Valuation Estimates From Referendum and Checklist Questions,” Journal of Agricultural and Resource Economics, 19 (1), 115-128.
This article compares willingness-to-pay (WTP) estimates from an actual survey using a checklist question regarding WTP for groundwater quality improvements to WTP estimates that would have been obtained had a single-bounded referendum (SBR) or a double-bounded referendum (DBR) question been asked. Results indicate differences among estimates from the three types of question formats. There was a loss of statistical efficiency of parameter and WTP estimates when moving from the checklist and DBR formats to the SBR format. WTP estimates from the SBR question were more sensitive to sample size and model specification than the others.
Jordan, J. L., and A. H. Elnagheeb (1994) “Consequences of Using Different Question Formats in Contingent Valuation - a Monte-Carlo Study,” Land Economics, 70 (1), 97-110.
Monte Carlo experiments were conducted to compare regression parameter and willingness-to-pay (WTP) estimates using the contingent valuation method's referendum and payment-card questioning formats. Strategic bias was controlled by making responses consistent with the true WTP. Two WTP models were constructed: linear and log-linear in explanatory variables. Based on the efficiency and mean-squared-error criteria, the payment-card model was superior to the referendum model. However, neither model outdid the other when the unbiasedness criterion was used. The performance of either model depends on the choice and distribution of the bids and payment-card categories.
McFadden, D. (1994) “Contingent Valuation and Social Choice,” American Journal of Agricultural Economics, 76 (4), 689-708.
The contingent valuation method for estimating the existence value of natural resources is examined for psychophysical robustness, statistical reliability, and economic sensibility. Extensions of standard models for willingness-to-pay, and suitable econometric techniques for analyzing these models, are developed. The analysis is applied to a series of experiments on the value of preserving wilderness areas in the western United States. The results call into question the reliability of the CV method for estimating existence values.
Cameron, T. A., and J. Quiggin (1994) “Estimation Using Contingent Valuation Data From a Dichotomous Choice With Follow-Up Questionnaire,” Journal of Environmental Economics and Management, 27 (3), 218-234.
Dichotomous-choice (referendum) contingent-valuation questions are inefficient in that a very large number of observations is required to identify a distribution of resource values with any degree of accuracy. An alternative questioning strategy introduces a follow-up dichotomous-choice question. We generalize upon previous analyses of this type of data by relaxing the assumption that the identical unobserved resource value motivates both responses. While values implied by the first and second responses are highly correlated and may be drawn from the same distribution, they are definitely not identical. Furthermore, assuming that they are can severely distort the estimated valuation distribution. (C) 1994 Academic Press, Inc.
Jordan, J. L. E. A. H. (1993) “Willingness to Pay for Improvements in Drinking-Water Quality,” Water Resources Research, 29 (2), 237-245.
Goodwin, B. K. O. L. A. C. T. T. C. P. S. (1993) “Discrete-Continuous Contingent Valuation of Private Hunting Access in Kansas,” Journal Of Environmental Management, 39 (1), 1-12.
Kanninen, B. J. (1993) “Optimal Experimental-Design for Double-Bounded Dichotomous Choice Contingent Valuation,” Land Economics, 69 (2), 138-146.
Kanninen, B. J. (1993) “Design of Sequential Experiments for Contingent Valuation Studies,” Journal Of Environmental Economics And Management, 25 (1), S1-S11.
Kanninen, B. J. K. B. (1993) “Sensitivity of Willingness-to-Pay Estimates to Bid Design in Dichotomous Choice Valuation Models - Comment,” Land Economics, 69 (2), 199-202.
Boyle, K. J. W. M. P. B. R. C. (1993) “The Role of Question Order and Respondent Experience in Contingent-Valuation Studies,” Journal Of Environmental Economics And Management, 25 (1), S80-S99.
Cameron, T. A. (1992) “Combining Contingent Valuation and Travel Cost Data for the Valuation of Nonmarket Goods,” Land Economics, 68 (3), 302-317.