On Scope Effects in Contingent Valuation: Does the Statistical Distributional Assumption Matter?

Abstract

Economic theory assumes that willingness to pay (WTP) increases with the quantity of the consumed good. This implies that there should be a scope effect in contingent valuation studies. However, in previous issues of Ecological Economics, several authors criticized the contingent valuation (CV) method for the absence of such effect or its inadequacy. In this paper, we contribute to this ongoing debate by proposing to systematically apply several WTP statistical distribution assumptions to test for scope effects and check its plausibility, following Whitehead's (2016) recent recommendations. We perform this approach using data from a Swiss case study assessing the WTP for an increased surface of forest reserves. We find that both mean WTP and scope effects are sensitive to the statistical distribution assumption. Regarding plausibility, scope elasticities provide mixed result and also depend on the assumed statistical distribution of WTP. For small sample size CV studies, a non-parametric analysis, a spike model or an open-ended format can thus be better suited to reveal scope effects than the classical parametric dichotomous choice analysis. We thus recommend to systematically apply several statistical distribution assumptions of WTP to test for scope effects and their plausibility.

Reshaping Preferences Over Coastal and Marine Environment Evaluating Temporal Effects on Preferences Raised by Information Campaigns

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