Determinants of insensitivity to quantity in valuation of public goods (original) (raw)
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Contingent Valuation: Environmental Polling or Preference Engine.”
Ecological Economics 60: 299-307, 2006
Contingent valuation has been used for over 30 years to reveal preferences for nonmarket environmental goods. Recent research has questioned the assumption that consumers posses fixed and well-defined preference orderings for such goods and suggests that individuals may need to form values for unfamiliar goods during the CV exercise itself. In this paper, we investigate how and why WTP is influenced by time to think, differing information levels and the opportunity to deliberate in a group setting for an unfamiliar good (red kite reintroduction) and a familiar good (green energy from wind power). For the Red Kite Project, we find that after several rounds of valuation final mean WTP is significantly different from initial mean WTP and that information, time to think and the opportunity to deliberate all influenced the valuation process. For the familiar good (wind power), mean WTP is not significantly different. Our overall conclusion is that whilst “one-shot” CV surveys may be appropriate for environmental goods that are familiar to participants (e.g. recreation benefits), they are not appropriate for less familiar goods (rare species) where the CV exercise should act as a ‘preference engine’ by giving participants time to think, information sufficient to their needs, and the opportunity to deliberate.
Journal of Agricultural Economics, 1997
The contingent valuation method is often criticised for being grounded in a hypothetical market in which respondents are not actually required to make the contributions they claim to be willing to pay. This paper undertakes a non-experimental comparison of real and hypothetical donations towards the public good of environmental preservation, based on a carefully defined theoretical framework. Evidence is presented which suggests that the mean hypothetical payment obtained from an open-ended CV mail survey is likely to be at least four times as high as the real payments that would be collected from a comparable charitable appeal. In addition, it is found that in a hypothetical context people are less likely to opt out of making a donationhowever; the donations which are made are on average no larger than those that could be expected in a real payment context. The implication is tentatively that the primary effect of the hypothetical context may be to reduce the extent of extreme free-riding, as opposed to creating incentives for strategic over-bidding. These results are subject to a number of signijkant empirical limitations.
Personal versus societal preferences in contingent valuation assessments
2010
Contingent valuation has been used extensively in estimating the value of environmental goods. One criticism of this approach, however, is that respondents in referendum-style contingent valuation surveys may express citizen assessments that take into account benefits to others rather than benefits that accrue purely to the respondent themselves. Within this context, the aim of this paper is to examine to what extent individuals express different preferences when adopting a personal or a social/citizen perspective. While this paper provides some support for the hypothesis that individuals express different preferences when adopting collective as opposed to personal choices, reported willingness to pay (WTP) was found to be insensitive to whether or not the respondents were asked the WTP question from a personal or social perspective.
Context Matters? An Experimental Analysis of Willingness to Pay for (Environmental) Public Goods
We perform a classic experiment, eliciting willingness to pay for a public good. We divide the sample set in two sub-groups. In one group, the individual payoff is defined as a share of total contributions. In the other group, the mechanism for the determination of the individual payoff is exactly the same, but it is explained that the public good refers to a project, curbing the negative effects of climate change. We regress experimental data, in order to understand which factors may affect the stated individual contribution and, in particular, if setting a context makes a difference.
The application of laboratory experimental economics to the contingent valuation of public goods
Public Choice, 1986
We have implicitly argued in the last section that a dynamic iterative survey mechanism may well need to be employed in the design of contingent valuation survey instruments in order to improve the accuracy of responses. Furthermore, due to the current inaccuracy of hedonic and travel cost approaches for valuing public goods, the least cost method, in our view, for establishing anchor or true individual values for testing alternative survey instruments is to use laboratory experiments. The objective of these experiments should be the development of the most simple survey design which gives accurate responses subject to the budget of the investigator. Is a complex iterative voting procedure required? How fast will such a procedure converge to ‘true’ values? What is the effect on incentives of relaxing the unanimity voting feature for large groups? All of these operational questions can at least qualitatively be answered in an experimental laboratory setting. This approach would allow rapid resolution of a number of problems which have developed in the application of the contingent valuation approach. First, the large difference between economic measures of willingness to accept and willingness to pay may be greatly reduced by application of demand revealing mechanisms. Any remaining difference between the two measures might then be properly attributed to psychological, ethical or other complicating factors. Second, the consistently large differences between the iterative bidding and payment card measures of willingness to pay suggests that one of the procedures might be more accurate than the other. Laboratory experimentation should be able to quickly identify the superior procedure. Third, contingent valuation studies which involve uncertainty have not proven successful. In a study of the willingness to pay to contain toxic wastes undertaken by Cummings and reported on in Schulze et al. (1983) nearly half of the respondents were willing to contribute the same amount of money for 50 percent odds of containment as for 100 percent odds of containment. Does this result indicate a failure of the expected utility hypothesis or a failure to perceive or comprehend probabilities by a large sub-sample of individuals? Or, is the survey at fault? Again the least cost approach for resolving these questions is likely to be a laboratory setting. Finally, individuals may have severe perception problems with the timing and method of payment used to collect bids for public goods. Schulze et al. (1983) report on a large divergence in the value of preserving visibility for visitors at the Grand Canyon using monthly payments in the form of higher electric utility bills to collect payment as compared to collecting higher daily entrance fees. Note that the first method hypothetically collects a regular payment on a monthly basis while the second hypothetically collects payments only if respondents visit the Grand Canyon. The first method implied an overall larger total benefit of preserving visibility than the second. Again, laboratory experiments could readily determine the relative accuracy of alternative temporal payment mechanisms.
Ecological Economics, 2010
Contingent valuation has been used extensively in estimating the value of environmental goods. One criticism of this approach, however, is that respondents in referendum-style contingent valuation surveys may express citizen assessments that take into account benefits to others rather than benefits that accrue purely to the respondent themselves. Within this context, the aim of this paper is to examine to what extent individuals express different preferences when adopting a personal or a social/citizen perspective. While this paper provides some support for the hypothesis that individuals express different preferences when adopting collective as opposed to personal choices, reported willingness to pay (WTP) was found to be insensitive to whether or not the respondents were asked the WTP question from a personal or social perspective.