Comparing consumers’ preferences and willingness to pay for non-GM oil using a contingent valuation approach

A contingent valuation method is used in this paper to compare Chinese and Japanese consumers’ preferences and willingness to pay for non-GM vegetable oil. An often ignored issue—the scale factor in a discrete choice model—is explicitly considered, and parameter equality for different data sets is formally tested before reaching a conclusion. Results indicate that in these two countries consumers’ attitude factors and demographic traits have significantly different effects on their purchase intentions, and on average, Japanese consumers are willing to pay a much higher premium for non-GM vegetable oil than Chinese consumers.      

A comparison of empirical models used to infer the willingness to pay in contingent valuation

The essence of the contingent valuation method consists of creating a hypothetical market where respondents are asked about their willingness to pay (WTP) for a non-market good. Different empirical models can be formulated to estimate the expected WTP of a sample of respondents and, then, through aggregation, the social valuation of the good is inferred.This paper outlines the relevance of the distributional assumptions when estimating mean WTP. Several parametric and non-parametric methods are discussed and applied to calculate the existence value of a natural space. Results show that WTP is extremely sensitive to the empirical model used.First version received: November 2002 / Final version received: January 2004     

Willingness to pay for environmental goods in Norway: A contingent valuation study with real payment

The study seeks to determine the maximum willingness to pay (MWTP) among a random sample of Norwegians, for membership in the largest environmentalist association in Norway, Norges Naturvernforbund (NNV). The study includes three stages: (1) a contingent valuation study, testing hypothetical MWTP; (2) those whose stated MWTP is at or above the current membership fee are then asked to pay this fee; (3) those individuals who do not pay in stage 2 are interviewed, and asked to consider revising their MWTP statement. The study is seemingly the first of its kind in comparing hypothetical and actual MWTP by typing valuation of a public good (the environment) to the value of a private good (membership of the NNV). The results show a rather poor correspondence between hypothetical and actual MWTP, since only 6 out of 64 who stated that they were willing to pay the membership fee in stage 1, actually paid this voluntarily in stage 2. Possible reasons for this discrepancy are discussed, on the basis of data from the telephone interview in stage 3, and on information gathered in stage 1. The data indicate that a substantial part of this discrepancy is due to MWTP being overstated in stage 1, but that other reasons also are important.     

Valuing cultural heritage in developing countries: comparing and pooling contingent valuation and choice modelling estimates

A substantial part of the United Nation’s World Heritage Sites (WHSs) can be found in developing countries, but many of them are in a bad state. Thus, there is a need to document the social benefits of these global goods in order to justify the costs of restoration and preservation programmes (RPPs). This study adds to the scarce literature on economic benefits of WHSs in developing countries, and reduces the need to perform very uncertain benefit transfers from European or US valuation studies. We apply Contingent Valuation (CV) and Choice Modelling (CM) to estimate the social benefits of RPPs for the My Son world cultural heritage site in Vietnam; both to foreign visitors and the local residents. We then compare the estimates from the CV and CM methods, and pool the results from the two methods. The results show that both CV and CM are suited to estimating the economic benefits of preserving cultural heritage of My Son. The two methods produce very similar results, which can be interpreted as a test of convergence validity. The pooling results give evidence to show that the CV and CM models have the same underlying preference structures. Thus, these valuation models can be successfully used in cost-benefit analyses to assess the benefits to cultural heritage of measures to reduce air pollution, soil erosion, climate change and other causes to deterioration of cultural heritage sites.

Willingness to pay for a clear night sky: use of the contingent valuation method

This article applies the Contingent Valuation Method (CVM) to the issue of night sky pollution. Light pollution decreases the ability to view a clear, unobstructed night sky. We administered a survey to the students of the Rochester Institute of Technology (RIT) to obtain estimates of Willingness To Pay (WTP) to improve night sky visibility and to prevent deterioration in visibility. This is the first CVM study that attempts to distinguish between these different WTPs. We find that students are willing to pay significantly more for a larger improvement in night sky conditions. We also find significant differences in WTP to improve versus prevent deterioration in night sky conditions.     

Dealing with preference uncertainty in contingent willingness to pay for a nature protection program: A new approach

In this paper, we propose an alternative preference uncertainty measurement approach where respondents have the option to indicate their willingness to pay (WTP) for a nature protection program either as exact values or intervals from a payment card, depending on whether they are uncertain about their valuation. On the basis of their responses, we then estimate their degree of uncertainty. New within this study is that the respondent's degree of uncertainty is “revealed”, while it is “stated” in those using existing measurement methods. Three statistical models are used to explore the sources of respondent uncertainty. We also present a simple way of calculating the uncertainty adjusted mean WTP, and compare this to the one obtained from an interval regression. Our findings in terms of determinants of preference uncertainty are broadly consistent with a priori expectations. In addition, the uncertainty adjusted mean WTP is quite similar to the one derived from an interval regression. We conclude that our method is promising in accounting for preference uncertainty in WTP answers at little cost to interviewees in terms of time and cognitive effort, on the one hand, and without researcher assumptions regarding the interpretation of degrees of uncertainty reported by respondents, on the other.     

Respondent direct experience and contingent willingness to pay for new commodities: a switching endogenous interval regression analysis

Most environmental economists argue that direct experience with the good being valuated, or with similar goods, is a precondition for providing valid willingness to pay (WTP) responses to contingent valuation questions. Two questions are posed in this article. The first is whether previous use experience of a resource (Séné nature reserve) similar to that being valuated (future nature reserves) and located in the same geographical area (Gulf of Morbihan) impacts on WTP. The second is whether accounting for the endogeneity of direct experience matters in the estimation of WTP. We find that respondents who have not experienced the Séné nature reserve provide value estimates that are statistically comparable to that of respondents who have experienced it. Our assumption is that respondents have acquired sufficient and adequate experience of future nature reserves from the questionnaire that experience obtained by experiencing the Séné nature reserve was not necessary for making a valid value formulation. Hence, aggregation of WTP estimates to obtain a total valuation of the future nature reserves is reasonable over the full target population. In addition, our results show that direct experience is endogenously determined; but controlling for the endogeneity has a marginal effect on WTP estimates.     

The effect of distance on willingness to pay values: a case study of wetlands and salmon in California

Most contingent valuation studies in the literature utilized a pre-determined geographic market area for their sample frame. In other words, they did not include variables that would measure the extent of the geographic areas over which to aggregate willingness to pay. These studies implicitly assumed that the effects of geographic distance were moot; an assumption that could have led to an understatement of the aggregate benefit values computed in these studies. The overall goal of this study was to determine if distance affects willingness to pay for public goods with large non-use values. The data used came from a contingent valuation study regarding the San Joaquin Valley, CA. Respondents were asked about their willingness to pay (WTP) for three proposed programs designed to reduce various environmental problems in the Valley. A logit model was used to examine the effects of geographic distance on respondents' willingness to pay for each of the three programs. Results indicate that distance affected WTP for two of the three programs (wetlands habitat and wildlife, and the wildlife contamination control programs). We calculate the underestimate in benefits if the geographic extent of the public good market is arbitrarily limited to one political jurisdiction.     

Housing crowding in developing countries and willingness to pay for additional space: The case of Korea

The very rapid rates of urban population growth in developing countries is placing great strain on their housing stock. Housing policies which are aiming at reducing or eliminating crowding are generally based on notions of ‘needs’ and ‘standards of adequacy’ which are more often based on arbitrarily selected criteria than on domestic economic conditions. The aim of this paper is to evaluate the willingness to pay for the additional housing space by households and the validity of target housing standards. The three methods used show consistently that — at least in Korea — the willingness to pay for additional space is less than 25 percent of the value of an extra unit of space, everything else being equal.     

The willingness to pay for mortality risk reductions in Mongolia

This paper reports results from a stated preference survey designed to estimate the willingness to pay for mortality risk reductions in Ulaanbaatar, Mongolia. The survey includes both contemporaneous and latent risk reductions of a magnitude typically achievable through clean air policy. The study is one of a series of national studies designed to provide comparable estimates around the world. One goal of this series is to build a more solid bridge for benefits transfer between developed and developing countries. The survey was conducted in winter 2010. Estimates of willingness to pay passed external and internal scope tests. Study results imply a value of statistical life of approximately $500,000 (based on a purchasing power parity exchange rate) for a contemporaneous 5-in-10,000 annual risk reduction.     

Motives behind willingness to pay for improving biodiversity in a water ecosystem: Economics, ethics and social psychology

This paper reports on empirical work extending the standard economic approach to valuation by including psychological and philosophical factors. More specifically a contingent valuation method survey was applied to biodiversity improvement while simultaneously assessing rights based beliefs, consequentialism and the theory of planned behaviour. The latter was assessed using measures of attitudes, subjective norms and perceptions of control over willingness to pay. The results show that standard socio-economic explanatory variables are far inferior to those of social psychology and philosophy, and that these factors offer a better understanding of the motives behind responses to contingent valuation. The implication is that alternative means of measuring an individual's pluralistic values should be taken into account in order to assess the validity and meaning of willingness to pay.     

Effect of substitutes in contingent valuation for a private market good

Economic theory predicts a decrease in valuation as the availability of substitutes increases. This paper describes a contingent valuation (CV) survey that investigates the effect of substitutes on valuation of private market goods. Using an approach that compares willingness to pay (WTP) values elicited from a CV question that accounts for substitutes with WTP values elicited from a similar question without substitutes, we find that allowing for substitutes can moderate WTP values. For the item valued in this study, a hamburger sandwich, allowing for substitutes was associated with a reduction of from 10% to 16% in stated values.     

Altruistic, egoistic and biospheric values in willingness to pay (WTP) for wildlife

We attempt to measure general attitudes and ethical beliefs towards preservation, as well as the importance of each of the three considered value orientations (biospheric, egoistic and altruistic) in WTP estimates. In the present study, we apply the GAC scale to a contingent valuation exercise for the recovery of the common murre (Uria aalge) in Galicia (Spain). Up to now, only a few studies in the field of environmental and ecological economics have analyzed value orientations under the Environmental Concern (EC) framework, obtaining mixed results. In the present work, we conclude that ethical aspects affect the individuals decision making process, and that value orientations play an important role in the pro-environmental attitude formation. These value orientations affect willingness to pay (WTP) estimates for environmental goods.     

Altruistic,egoistic and biospheric values in willingness to pay (WTP) for wildlife

We attempt to measure general attitudes and ethical beliefs towards preservation, as well as the importance of each of the three considered value orientations (biospheric, egoistic and altruistic) in WTP estimates. In the present study, we apply the GAC scale to a contingent valuation exercise for the recovery of the common murre (Uria aalge) in Galicia (Spain). Up to now, only a few studies in the field of environmental and ecological economics have analyzed value orientations under the Environmental Concern (EC) framework, obtaining mixed results. In the present work, we conclude that ethical aspects affect the individuals decision making process, and that value orientations play an important role in the pro-environmental attitude formation. These value orientations affect willingness to pay (WTP) estimates for environmental goods.     

Bounds on the willingness to pay for non-traded goods: A possibility theorem

This note contains a proof of the following theorem. If an agent's preferences for traded goods are known, and if the quantity of a non-traded good provided him alters his demand for traded goods, then it is possible to place bounds on his willingness to pay for increments in this quantity.     

Public willingness to pay for endocrine disrupting chemicals-free labelling policy in Korea

As public interest in health and safety grows, endocrine disrupting chemicals (EDC) have become an inevitable problem in society. One way to reduce the social cost of exposure to EDC is to grant a label certification to eco-friendly products that do not release EDC. The Korean government is considering introducing an EDC-free labelling policy. Therefore, our article tries to examine the public willingness to pay (WTP) for implementing the EDC-free labelling policy in Korea. For this purpose, a contingent valuation survey of 1000 Korean consumers was conducted in 2016. We used a one-and-one-half-bounded dichotomous choice question to elicit the WTP responses from the respondents. The mean of household WTP for the EDC-free labelling policy implementation is estimated to be KRW 2266 (USD 2.05) per year. When we expand the value to the whole country, it amounts to KRW 42.9 billion (USD 38.8 million) per year. These values are statistically meaningful at the 1% level and imply that the EDC-free labelling policy contributes to households’ utility and should be implemented immediately.     

Keeping up appearances: Motivations for socially desirable responding in contingent valuation interviews

The tendency to give socially desirable rather than true statements of willingness to pay (WTP) is an often reported form of bias in contingent valuation surveys. While previous research on this bias has exclusively focused on the detection of mode effects, the present study directly assesses a respondent's motivation to state WTP in a socially desirable manner. This study tests the effect of three theoretical motivations for socially desirable responding on WTP responses: A general need for social approval, a perceived social norm calling for a high contribution and perceived lack of anonymity of the interview situation. Questions for the empirical assessment of these factors are developed.Results of a valuation study in Southwest China show differing and independent impacts of these factors. While there is no effect of perceived anonymity, need for social approval biases WTP responses upwards but does not influence the general decision to state a positive WTP. It also turns out that rather the fear of losing social status than the striving for higher social approval is the main driver of this bias. Respondents perceiving a social norm for high WTP are more likely to state a positive WTP, but the specific amount is not affected.     

The impact of behavioural risk-reduction interventions on willingness to pay to avoid sexually transmitted infections: a stated preference study of justice-involved youth

Risky health behaviours, such as smoking, drinking and risky sex, are substantial contributors to the U.S. morbidity rates and healthcare costs. While economic models typically regard preferences as stable, a growing literature suggests that information, including how it interacts with intentions and attitudes, plays an important role in unhealthy behaviours. Relatedly, a large health literature demonstrates that theory-based behavioural interventions can successfully change risky behaviour. This study uses the contingent valuation (CV) survey method to investigate the impact of behavioural interventions on a novel outcome measure: the willingness to pay (WTP) to avoid the consequences associated with risky behaviour. Using novel pre- and post-intervention data from Project MARS (Motivating Adolescents to Reduce Sexual Risk), this study estimates the impact of the intervention on elicited WTP to avoid sexually transmitted infections (STIs). It is found that after the intervention, participants’ elicited WTP to avoid STIs were significantly higher, and more sensitive to differences in infection severity. These results suggest that the intervention may affect risky sexual behaviour by changing the perceived value of avoiding the consequences of risky sexual behaviour. Additionally, these findings contribute to an ongoing debate regarding the construct validity of CV studies in health economics.     

Mixed logit estimation of willingness to pay distributions: a comparison of models in preference and WTP space using data from a health-related choice experiment

Different approaches to modelling the distribution of WTP are compared using stated preference data on Tanzanian Clinical Officers’ job choices and mixed logit models. The standard approach of specifying the distributions of the coefficients and deriving WTP as the ratio of two coefficients (estimation in preference space) is compared to specifying the distributions for WTP directly at the estimation stage (estimation in WTP space). The models in preference space fit the data better than the corresponding models in WTP space although the difference between the best fitting models in the two estimation regimes is minimal. Moreover, the willingness to pay estimates derived from the preference space models turn out to be very high for many of the job attributes. The results suggest that sensitivity testing using a variety of model specifications, including estimation in WTP space, is recommended when using mixed logit models to estimate willingness to pay distributions.