Hedonic Price Analysis and Selectivity Bias

Hedonic valuation of quality attributes can be misleading when theassumption that these attributes are exogenous to sample selection isviolated. This paper considers the simultaneity between hedonic valuationand sample selection in the context of a model of producer behavior andinvestigates empirically the case where land is demanded for use as an inputeither in agricultural production or in touristic development. The empiricalanalysis suggests that failing to correct for sample selection results in abiased valuation of the effect of water salinity on agricultural land.     

National and International Benefit Transfer Testing with a Rigorous Test Procedure

Benefit transfer, as a mean to transfer values from existing monetary valuation studies to new policy sites, has been in use for many years. This paper aims to analyze the forecasting quality of benefit transfer by applying a rigoroust-test – also referred to as Accuracy-t-test – that takes into account testing errors which were made in previous surveys. Beside the analysis of national benefit transfers based on two German contingent valuation studies additional efforts were made to investigate into the validity and accuracy of international benefit transfer by considering two Norwegian studies that employed a similar survey design.     

Minimising Payment Vehicle Bias in Contingent Valuation Studies

The payment vehicle is a crucial element inapplications of the contingent valuation methodbecause it provides the context for payment. However,in many countries a relative unfamiliarity with theuse of tax levies and referenda can affect theplausibility of payment vehicles and lead to paymentvehicle bias. The most commonly used approach fordetermining whether payment bias exists is to usetests of convergent validity. It is demonstrated thatsimple tests of convergent validity can be ineffectivein diagnosing the existence of payment vehicle bias.Payment vehicle bias is found to occur because ofdifferences in the coverage of payment vehicles anddoubts about payment being one-off. When respondentsare found to be protesting against a particularpayment vehicle, the current state of the art approachis to delete them from the sample. In this paper analternative approach that relies on the recoding ofprotest responses is proposed.     

The Effect of Protest Votes on the Estimates of WTP for Use Values of Recreational Sites

Contingent valuation studies are often characterized by a considerable number of protest responses, which may cause selectivity bias on the final estimates for WTP. Sample selection models can detect and – if necessary – correct selectivity bias. In economic applications where the relevant dependent variable is continuous, sample selection models are generally estimated using Heckman's 2-step method rather than the FIML estimator. Either method has its own drawback: computational complexity for the FIML method, susceptibility to collinearity problems for the 2-step method. Using data on valuation of forest resources for recreational use, we analyse the performance of the two estimators. In this application, given the presence of some collinearity, the FIML is preferred to the 2-step method. A procedure is outlined to deal with selectivity problems in similar settings.     

A Learning Design for Reducing Hypothetical Bias in the Contingent Valuation Method

Over the last few years a great deal of research has focussed on hypothetical bias in value estimates obtained with the contingent valuation (CV) method and on means for ameliorating if not eliminating such bias. To date, efforts to eliminate hypothetical bias have relied on calibration techniques or on word-smithing of one kind or another to induce subjects to provide responses to hypothetical questions that mimic responses made by subjects facing actual payments in the valuation experiment. This paper introduces a different approach for eliminating hypothetical bias. A design for a CV survey format is presented which provides subjects with the opportunity to learn how the CV institution works. Sequential referenda are conducted where respondents gain experience in CV settings by participating in both hypothetical and real referenda. The logic of this Learning Design is a straightforward application of the trials process used in experimental economics. We demonstrate that the Learning Design is effective in eliminating hypothetical bias in surveys concerning donations to two different public goods.     

A Field Experiment Involving Cash and Hypothetical Charitable Donations

An important focus for concern about Contingent Valuation (CV) is that hypothetical payments for non-market goods are biased upwards in comparison to cash payments. Lack of realism, through its influence on incentives to mis-report payments, may explain the divergence. This paper reports on a study which attempts to overcome this problem by emulating a real fund-raising solicitation by the Isle of Eigg Trust for both real and hypothetical donations. In contrast to previous results, the mean cash donation was higher (£3.71) than the man CV donation (£3.41). A third survey, which used a neutral CV design, implemented by a research organization, obtained a mean donation which was much higher (£6.21) than the cash equivalent.     

Trading Taxes vs. Paying Taxes to Value and Finance Public Environmental Goods

The potential sensitivity of environmentalresource valuation to payment vehicles is ofinterest to researchers and decision-makersinvolved in estimating and applying thesenumbers. A conceptual model is developed whichprovides insight into how the different paymentvehicles of a special tax and a taxreallocation affects the willingness to pay(WTP) for environmental goods. Hypothesistesting using contingent valuation datasuggests WTP with a tax reallocation is higherthan WTP with a special tax for ground waterquality protection in Georgia and Maine, USA.Technical measurement and welfare analysisimplications and limitations of valuing andfinancing public environmental goods using taxrealloactions are discussed.     

The Value of Clean Air in China： Evidence from Beijing and Shanghai

We estimate the willingness to pay （WTP） of Beijing and Shanghai residents for improving the air quality of the two cities from their levels prior to the 2008 Beijing Olympic Games to the level achieved during the Olympics. The data are obtained from a contingent valuation study conducted through face-to-face interviews in June 2008 in Beijing and Shanghai prior to the Beijing Olympics, during which time there was intensive debate about Beijing＇s air quality. Residents in both cities are willing to pay more when they are more exposed to air pollution, when their disposable income increases, and when they have stronger beliefs that public opinion plays an important role in government policy making. Beijing residents are willing to pay more than Shanghai residents, due possibly to Beijing＇s poorer air quality. Overall, aggregate WTP for air quality improvement accounts for about 0.53% of the 2008 GDP in Beijing and 0.22% of the 2008 GDP in Shanghai.     

Complements, Substitutes, Budget Constraints and Valuation

This study employs a multi-program contingent valuation (CVM) design tosimultaneously assess the value of three ecosystem conservation programsin Alberta, Canada. The design is different from most other CVM designsand has several different features including the natural incorporation ofdirect reminders of substitute/complementary programs and budgetconstraints. In contrast to the findings of other studies, two of the environmentalprograms appear to be complements and other combinations of the programssuggest an absence of substitution effects. The multi-program model ismore informative and robust in terms of theoretical validity and expectedrelationships with demographic and recreational characteristics of therespondents.     

Migration and intention to return: entrepreneurial intentions of the diaspora in post-conflict economies

This article examines the intentions of the diaspora to return to their homeland and engage in entrepreneurial activity. We focus on post-conflict economies where the development potential of return migration is significant. Our article demonstrates that the entrepreneurial intentions of returning diaspora are affected by their level of trust and perceptions of risk in institutions at home. Through a survey of diaspora returning to Kosovo, the paper finds that business experience has a negative relationship on probability to return, but it has a positive relationship on entrepreneurial intentions. However, those with professional and qualified jobs are more likely to have intentions to return, but less likely to have entrepreneurial intentions. The paper contributes to academic research on the central importance of institutions to post-conflict development, demonstrating that by enhancing the institutional environment investment can be attracted home.     

Preference Structures, Property Rights, and Paired Comparisons

The method of paired comparisons was used to determine the structure of survey participants' value expressions for Australian native forests. The same participants were also surveyed using the contingent valuation method (CVM). Data from the paired comparisons were used to construct preference maps which enabled identification of participants whose value expressions were structurally incompatible with economic welfare theory – in particular, those participants who expressed their values according to lexicographic preferences. For some of these participants, CVM results did not provide appropriate measures of WTP. The surveys also demonstrated the importance of allowing participants' own views on property rights to dictate the valuation context offered.     

An Experimental Testing of Anchoring Effects in Discrete Choice Questions

This paper re-examines the openended/dichotomous choice question in the lab. It hasearlier been suggested that the dichotomous choiceformat suffers from anchoring and yea-saying.Comparing actual economic commitments for a privategood with a significant market value, we cannot rejectthe null hypothesis of equal WTP for the two formats.We conclude that problems with DC might be due toissues of how the survey is framed, not the DCquestion itself.     

Researching Preferences,Valuation and Hypothetical Bias

A number of recent papers in environmental economics have focused on the process of researching preferences – agents are uncertain about preferences but with effort may narrow their uncertainty. This issue has arisen in formulating bids in contingent valuation (CV) as well as the debate over the divergence between WTP and WTA. In the context of CV, it has been suggested that the hypothetical nature of the preference elicitation process biases responses. This paper provides both a theoretical model and experimental evidence to contribute to this debate. The model is a model of competitive bidding for a private good with two components that are particularly relevant to the debate. The first component is that bidders are unsure of their own value for the private good but may purchase information about their own value (researching preferences). The second component is that there is a probability that the auction is hypothetical – that the winning bidder will not get the private good and will not pay the winning bid. The experiment tests this theoretical model of bidding equilibrium and analyzes the effects of variations in the parameters (hypotheticalness, information costs and number of agents) on the endogenous variables (such as the proportion of bidders who become informed and the winning bid). Experimental results suggest that an increase in the hypotheticalness of an auction tends to decrease the likelihood that bidders pay for information on their valuation with an ambiguous effect on the winning bid.