Contingent valuation: A new perspective

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in AbstractAfter several decades of academic research on the contingent valuation (CV) method a consistent behavioral explanation of 'hypothetical bias' is still lacking. Based on evidence from economics, economic psychology and the political sciences, I propose an explanation that is based on two simple working hypotheses about respondent behaviour in contingent valuation surveys. The first hypothesis is that survey respondents are unable to form consistent preferences about unfamiliar goods unless the choice context offers reliable, informative cues that can be rationally exploited in simplified heuristics. The second hypothesis is that the probability and impact of strategic responses in dichotomous-choice questions about public goods depends on the extent to which the presented hypothetical costs differ from the actual costs. The literature on hypothetical bias is revisited in the light of these behavioral hypotheses. I find that the hypotheses are generally supported by the empirical data. Moreover, the hypotheses are able to explain several important empirical phenomena that previous research has not been able to explain. In particular, they solve the puzzle that pre-election polls, but not CV surveys, are able to predict actual referendum outcomes, and they explain why income effects on willingness to pay are lower in CV responses than in actual votes. If confirmed by further studies, the hypotheses will have important implications for future research and practice. First, the hypothetical costs presented in the dichotomous choice question should to be close enough to the actual costs to be credible to all respondents. This can be achieved by specifying the costs as a percentage (rather than absolute) change in taxes. Second, the respondents should be given the option to answer based on information about the positions of large parties and interest groups with known political orientation rather than based on the raw policy information. Theory and evidence suggest that this new survey paradigm largely eliminates the fundamental problems of the conventional stated preference methods.

Managing coastal area resources by stated choice experiments

“…A large class of stated preference methods appropriate to support environmental risk management have been tested during the last decade (Schlä pfer, 2008). Most often, a contingent valuation method (CVM), has been chosen to estimate consumer's willingness to pay for non-market goods including environmental risk management (Baral et al, 2008).…”

Willingness to pay among households to prevent coastal resources from polluting by oil spills: A pilot survey

“…But due to the lack of a market, quantification of natural resources in monetary terms is always prone to large uncertainties, implying a risk of their negligence during decision making. A large class of stated preferences approaches appropriate to support environmental risk management has been tested during the last decade (Schläpfer, 2008). Most often, a contingent valuation method (CVM) has been chosen to estimate the consumer's willingness to pay for natural resources (Baral et al, 2008).…”

Economic Valuation of Watershed Services for Sustainable Forest Management: Insights from Mexico

“…The willingness-to-pay results can then be used by decision makers to weigh policy options. Details on CV description can be found in Mitchell & Carson (1989), Boyle (2003), Schlapfer (2008), TEEB (2019), among others.…”