Protester or non‐protester: a binary state? On the use (and non‐use) of latent class models to analyse protesting in economic valuation*

In the analysis of stated preferences studies, it is often assumed that protesting is a discretely measured item only occurring among those who are not willing to pay. However, various studies have recently shown that protest beliefs are as well held by respondents who state a positive willingness to pay (WTP). Using latent class (LC) models, we investigate the extent of heterogeneity with respect to protest beliefs among all respondents of two contingent valuation studies. The advantage of LC models is that classes of individuals are endogenously identified and no selection bias is introduced by ad hoc definitions of protesters. Further we investigate whether it is possible to identify a class of non‐protesters. Finding a group of pure non‐protesters could indicate how strongly stated WTP in the whole sample is affected by protest beliefs. For both samples, we find a class with strong protest beliefs but no pure non‐protest class. Overall, our results suggest that LC models might not be the first choice to determine unbiased WTP measures, but they provide valuable insights into the degree of protesting expressed by different groups and corresponding determinants of group membership.     

Stated and Inferred Attribute Attendance Models: A Comparison with Environmental Choice Experiments

There is increasing evidence that respondents to choice experiment surveys do not consider all attributes presented in the choice sets. Not accounting for this ‘attribute non‐attendance’ leads to biased parameter estimates, and hence biased estimates of willingness to pay. Various methods exist to account for non‐attendance in the analysis of choice data, with limited agreement as to which method is ‘best’. This paper compares modelling approaches that can account for non‐attendance, based on stated and inferred attribute non‐attendance. Respondents' stated non‐attendance is incorporated in the specification of multinomial and mixed logit models. Inference of non‐attendance is based on equality constrained latent class models. Results show that model fit is significantly improved when attribute non‐attendance is taken into account, and that welfare estimates are lower when incorporating non‐attendance. The inference based on equality constrained latent class models provides the best model fit. There is little concordance between stated and inferred non‐attendance, suggesting that respondents may not answer attendance statements truthfully.     

Willingness to contribute to the management of recreational quality on private lands in Finland

In Finland, privately owned nature areas are widely used for recreation due to open public access. However, since landowners are not obligated to take everyman's rights into consideration when making management decisions, the recreational quality of nature areas is not guaranteed for users. We examined whether individual recreationists on private lands would be willing purchase management actions from landowners that influence recreational quality. In addition to willingness to pay, we assessed willingness to contribute labor to such actions. The results demonstrated that about half of the recreationists who participated in our survey were willing to contribute labor and about 10% were willing to pay to direct the management of their typical recreation site on private lands. The mean willingness to pay was 92 euros per year and the mean willingness to contribute labor 3.5 days per year. A latent class regression model revealed that recreationists were not, however, completely homogeneous in their preferences for the actions or in their preferred contribution forms. On the basis of the results, there is moderate demand from recreationists for management to improve recreational quality and the potential for local landscape management arrangements that allow individual recreationists to contribute labor.     

Modeling preference heterogeneity in stated choice data: an analysis for public goods generated by agriculture

Stated choice models based on the random utility framework are becoming increasingly popular in the applied economics literature. The need to account for respondents' preference heterogeneity in such models has motivated researchers in agricultural, environmental, health, and transport economics to apply random parameter logit and latent class models. In most of the published literature these models incorporate heterogeneity in preferences through the systematic component of utility. An alternative approach is to investigate heterogeneity through the random component of utility, and covariance heterogeneity models are one means of doing this. In this article we compare these alternative ways of incorporating preference heterogeneity in stated choice models and evaluate the sensitivity of estimated welfare measures to which approach is selected. We find that a latent class approach fits our data best, but all the models perform well in terms of out-of-sample predictions. Finally, we discuss what criteria a researcher can use to decide which approach is most appropriate for a given data set.     

Attitudes,willingness to pay,and stated values for recreation use fees at an urban proximate forest

Studies have combined contingent valuation and attitude theory in models directly predicting willingness to pay recreation fees. Little research, however, has modeled predictions of attitudes toward fees on both the intention to pay (WTP) and stated payment amount ($WTP) simultaneously. This article addresses that knowledge gap using onsite survey data from 1068 recreationists at the McDonald-Dunn forest in Oregon. Attitudes toward paying an annual fee at this forest were directly associated with WTP and were among the strongest predictors of WTP. Respondents with supportive attitudes toward paying the annual fee were more willing to pay than those who were opposed. The strength of attitudes also influenced WTP, with those respondents having stronger opposition being least likely to pay. Attitudes toward paying a fee were indirectly (i.e., mediation) related to the stated payment amount ($WTP), suggesting that payment is influenced by intention to pay (WTP), and this intention is partially a function of attitudes about fees.     

Respondents' ignoring of attribute information in a choice modelling survey

One debate in economics centres on consumers' decision-making strategies and whether they should be explicitly considered. The default assumption for choice modelling has been that all the attributes presented to respondents somehow influence their choices. More recently, choice modelling research has begun examining how respondents use information. This article presents research that focused on which pieces of information respondents used in responding to a choice modelling survey. The use of information by respondents was captured in the course of the administration of a computer-aided survey, so the research did not rely on posterior self-reporting. Access to the information was captured for each attribute of every alternative, which allowed flexibility in assessing use of information. Three mixed logit models are presented, based on three different assumptions about information use. The results suggest that accounting for respondents' information use affects modelling results, but the impact on estimates of willingness to pay may be relatively small.     

Analyzing the Demand for New Value-Added Product: Case of Pure Blueberry Sweetener

Analyzing the demand for a new product that is not on the market presents challenges as agricultural producers search for potential value-added products and develop marketing strategies for these products. This study examines the market potential for a new pure blueberry sweetener in Kentucky. The results from a contingent choice survey indicate that the average respondent was not willing to pay a significantly positive amount for the product. However, a small group of respondents, who can be identified by their overall blueberry purchasing intentions and age, was willing to pay a price higher than the product's cost of production. Small and medium-size producers who are often limited by the financial and technical constraints associated with actual market trials of new products are likely to find that the type of marketing research described here is a particularly cost-effective method of getting information to assess market potential.     

Consumers' Willingness to Pay for Quality and Safety in Clams

The aim of the research is to estimate the potential demand for certified clams in Italy and to investigate the determinants of maximum amount that respondents are willing to pay for this product. Quantitative analysis was used based on 1,067 face-to-face interviews collected in 3 Italian regions in the north bordering the Adriatic Sea (Friuli-Venezia Giulia, Veneto, and Emilia-Romagna) carried out during 2008. The consumers' willingness to pay (WTP) is measured using a contingent valuation method. In order to estimate separately the determinants of the probability that respondents are willing to pay and the maximum that they are willing to pay, a generalization of Tobit model was adopted. The results indicate that consumers are willing to pay a premium price mainly to purchase better quality products. The research provides some initial insight into consumers' WTP that can be useful for certified fish farming.     

Resettlement preferences from landslide prone areas in Cameroon: Willingness to move,reasons to stay

Information about resettlement preferences is an important prerequisite for the success of voluntary resettlement as a disaster risk reduction strategy. Yet, even in conditions where individual preferences for resettlement are met, resettlement programs may fail. In this study, we confront individual preferences for resettlement with obstacles to resettlement in order to identify conditions for success and failure of voluntary resettlement. Semi-structured interviews and focus groups discussions are combined with a structured household survey and a discrete choice experiment to elicit individual resettlement preferences among farmers living in the landslide-prone Bamboutos caldera, in Cameroon. A mixed logit model and a latent class model are used to assess resettlement preferences and to investigate differences in preferences between socioeconomic groups. We find that, in general, people are willing to resettle away from landslide prone areas to safer areas, but that preferences for resettlement conditions vary between socioeconomic groups. Wealthier households show a greater willingness to resettle, especially to locations with improved road infrastructure, while poorer respondents are less willing to resettle, especially when this can negatively affect their social network. Beyond individual preferences, resettlement strongly depends on group behavior, historical events and trust in institutions. The stumbling blocks in the Bamboutos caldera include border disputes at the resettlement location, the high cost of resettlement and administrative challenges. With this case study, we demonstrate the added value of complementing a discrete choice experiment with qualitative research, as it leads to an integrated view of the resettlement situation of the affected population.     

Demand for a labor‐based drought insurance scheme in Ethiopia: a stated choice experiment approach

Index‐based weather insurance is increasingly used to manage weather‐related risks in smallholder agriculture. However, cash‐constrained smallholders often lack the resources to pay an insurance premium, which may undermine its wider adoption. This article investigates alternative insurance payment methods that may help to enhance the adoption of index‐based weather insurance. We use a choice experiment to elicit smallholders’ willingness to pay in cash or labor for index‐based weather insurance in four districts in the south‐central highlands of Ethiopia. The insurance schemes were created using a fractional factorial design with three factors: work, cash, and payout rate. We analyze the choice data using a random parameter mixed logit model. We find that the average participants need a subsidy to pay cash for insurance because their willingness to pay is less than the expected cost of the insurance. On average, they are willing to pay only 0.81 ETB (Ethiopian currency) to get an expected yearly payout of 1 ETB. However, most are willing to participate in work‐for‐insurance programs at lower daily wage rates than is common for other work programs in Ethiopia.     

Online Survey Data Quality and Its Implication for Willingness‐to‐Pay: A Cross‐Country Comparison

Using online surveys to elicit consumer preference is gaining popularity because of several advantages offered by this method. Past research mainly focuses on the comparison between online surveys and other survey modes. Few have explored methods of using online survey tools to improve data quality for consumer willingness‐to‐pay (WTP) estimates. This article determines the impact of using a validation question (VQ) approach that asked survey respondents to select a particular answer on improving online survey data quality across six countries. Results show that survey data quality is a common problem in online surveys across countries and the severity of this problem differs significantly. Using VQs might detect the respondents who are less careful in answering survey questions, thus providing less reliable answers. The econometric models for respondents who correctly answer VQs (pass VQs) perform significantly better than the models for respondents who incorrectly answer VQs (fail VQs). The WTP estimates for respondents who pass and fail VQs differ significantly; and in general the WTP estimates for respondents passing VQs have smaller variances than those for all respondents and for respondents failing VQs.     

Testing hypothetical bias in a framed field experiment

Hypothetical bias is tested based on inter- and intra-respondent comparisons of choice behavior, applying a hypothetical and real choice experiment. The inter-respondent comparison commonly applied in the environmental and agricultural economics literature consists of a control group of buyers who are asked to hypothetically choose between conventional and organic beans and an experimental group of buyers who are endowed to purchase the same beans using an identical experimental design. Hypothetical bias is tested by comparing inter- and intra-respondents’ (i) hypothetical and real choices, (ii) preference parameters of the estimated choice models related to hypothetical and real choices, and (iii) hypothetical and real willingness to pay (WTP). Choices in the experimental group are highly consistent when switching from hypothetical to real choices for this study's homegrown goods. However, after being endowed, the price sensitivity of lower income households drops, suggesting a house money effect. WTP derived from actual purchases is higher than WTP based on hypothetical choices, indicating a negative hypothetical bias, but differences are only significant in the case of the inter-respondent comparison. Actual prices paid by respondents in the field experiment appear to be considerably lower than the estimated WTP values and yield a mixed picture of hypothetical bias.     

The visual impact of agricultural sheds on rural landscapes: The willingness to pay for mitigation solutions and treatment effects

New rural and industrial sheds cause significant transformations determining a negative change in landscape perception. In this paper the willingness to pay (WTP) of residents to mitigate the visual impact of sheds in the rural areas of the UNESCO World Heritage Site “Vineyard Landscape of Piedmont: Langhe-Roero and Monferrato” is estimated through a Choice Experiment (CE). The CE survey was carried out through face-to-face interviews involving 400 residents. The set of mitigation attributes was selected by means of a landscape analysis and presented to respondents using a set of images (close and distant views). Conditional Logit (CLogit) and Mixed Logit (MXL) models both in preference and in WTP space were estimated. From the empirical point of view, the study shows that sheds are generally perceived as negative landscape elements, and that residents are willing to pay for mitigation solutions, such as tree lines and formal hedgerows. The results are relevant for policy makers since they suggest how agricultural sheds are perceived and which mitigation strategies are preferred by local residents. From the methodological point of view, we estimate and test different models for assessing the effect of the visual treatment (close vs distant view). We show the theoretical equivalence of a fully interacted model (i.e., estimated on the whole sample and including interaction terms with the treatment), with split models of the choice for separate subsamples submitted or not to the treatment. We find that in estimation the equivalence holds in the results of Conditional Logit models, but not in Mixed Logit models. The reasons and implications are discussed.     

Using Geographically Weighted Choice Models to Account for the Spatial Heterogeneity of Preferences

In this paper, we investigate the use of geographically weighted choice models for modelling spatially clustered preferences. We argue that this is a useful way of generating highly‐detailed spatial maps of willingness to pay for environmental conservation, given the costs of collecting data. The data used in this study come from a discrete choice experiment survey of public preferences for the implementation of a new national forest management and protection programme in Poland. We combine these with high‐resolution spatial data related to local forest characteristics. Using locally estimated discrete choice models we obtain location‐specific estimates of willingness to pay (WTP). Variation in these estimates is explained by characteristics of the forests close to where respondents live. These results are compared with those obtained from a more typical, two stage procedure which uses Bayesian posterior means of the mixed logit model random parameters to calculate location‐specific estimates of WTP. We find that there are indeed strong spatial patterns to the benefits of changes to the management to national forests. People living in areas with more species‐rich forests and those living nearer bigger areas of mixed forests have significantly different WTP values than those living in other locations. This kind of information potentially enables a better distributional analysis of the gains and losses from changes to natural resource management, and better targeting of investments in forest quality.     

Willingness to pay for pST-treated pork

The progress in porcine somatotropin (pST) application justified an assessment of consumer acceptance of pST-treated pork. A survey of the Atlanta metropolitan area, USA, collected information about consumer attitudes toward lean pork produced with biotechno-logically developed pST. A qualitative dependent variable model was used to identify socioeconomic consumer characteristics influencing the willingness to pay for lean pork. The model was modified to account for the selectivity bias of the sample data. Results indicate that frequent pork consumers were willing to pay more for lean pork produced using pST in contrast to respondents who frequently ate beef, were older, and had relatively high income. Probabilities associated with the willingness to pay a specific premium were calculated. In general, the average respondent was willing to pay an additional 18¢ per kg of lean pork produced using pST.     

Pesticides,Preference Heterogeneity and Environmental Taxes

In this paper we present results from two choice experiments (CE), designed to take account of the different negative externalities associated with pesticide use in agricultural production. For cereal production, the most probable impact of pesticide use is a reduction in environmental quality. For fruit and vegetable production, the negative externality is on consumer health. Using latent class models we find evidence of the presence of preference heterogeneity in addition to reasonably high willingness to pay (WTP) estimates for a reduction in the use of pesticides for both environmental quality and consumer health. To place our WTP estimates in a policy context we convert them into an equivalent pesticide tax by type of externality. Our tax estimates suggest that pesticide taxes based on the primary externality resulting from a particular mode of agricultural production are a credible policy option that warrants further consideration.     

Eliciting citizen preferences for multifunctional agriculture in the watershed areas of northern Thailand through choice experiment and latent class models

Multifunctional agriculture is increasingly discussed as an alternative to conventional, mono-functional farming and its negative environmental impacts. This study aims at determining Thai society’s demand for agri-environmental services offered by a multifunctional agricultural system using two models, i.e. a Choice Experiment Model and a Latent Class Choice Model. The Choice Experiment Model (CEM) is employed to assess citizens’ willingness to pay for various attributes of multifunctional outputs. Extending from the CEM, the heterogeneity of citizens’ preferences across environmental attitudes and knowledge is captured through the Latent Class Choice Model (LCCM). Survey data was obtained from structured interviews with 373 respondents in the country’s two largest cities, namely Bangkok and Chiang Mai. The results of the CEM suggest that urban Thai citizens are willing to pay for changes toward multifunctional agriculture, as expressed in an increase of their monthly food expenses. Among the attributes of agri-environmental practices, “organic agriculture in combination with agro-biodiversity conservation” garnered the highest preference, followed by “organic farming as single practice” and “Good Agricultural Practice combined with agro-biodiversity conservation”. Income, gender, agri-environmental knowledge and environment-conscious attitude are important factors determining urban citizens’ support of multifunctionality. Findings of the LCCM revealed a strong heterogeneity in attribute valuation across three different classes of respondents, suggesting that policy-makers need to be aware of diverse preference patterns among Thai citizens with regard to specific attributes of multifunctional agriculture. We further conclude that enhancing environmental literacy and consciousness is a key determinant in gaining citizens’ support for multifunctional agriculture.     

Are bilateral conservation policies for the Białowieża forest unattainable? Analysis of stated preferences of Polish and Belarusian public

Transboundary nature protected areas constitute a considerable proportion of all the existing spatial forms of biodiversity protection. One prominent example is the Białowieża Forest, shared by Poland and Belarus. There is a considerable literature on allocation of funds to preserving nature shared by several countries. Some of this literature assess the funding schemes and the impacts on biodiversity within the EU. A particular challenge for the Białowieża Forest is that the larger part of it is outside the EU border. There has been less research on the economic benefits that citizens attach to protected transboundary land nature on the other side of the border. We are trying to fill the gap by finding out and comparing preferences towards increased protection of domestic and foreign segments of the transboundary Białowieża Forest, stated by samples of Polish and Belarusian citizens. The results of a discrete choice experiment show an almost unilateral preference for nature conservation, passive protection of forest land, on the domestic side. Whilst Polish respondents on average are willing to pay for an increased area under protection, on their side of the border, most Belarusians seem to be satisfied with the status quo. Taken at face value, there is even an apparent mutual disutility derived from the perspective of co-financing bilateral passive protection programmes in the Białowieża Forest. By use of latent class analyses of responses, a group of the Polish sample willing to contribute to the transboundary conservation is identified and described, and compared against the non-cooperative groups on both sides of the border. The results can to some extent be explained by a strict border division with a high fence, by differences in welfare or by behavioural reasons. However, it cannot be ruled out that the affected populations simply do not perceive the Białowieża Forest as a binational public good.     

Consumers' willingness to pay for food quality - The case of eggs

The aim of this paper is to introduce an approach to estimating the marginal willingness to pay (WTP) for food quality and safety using data on actual consumer purchases. Marginal WTP for specific food product varieties can be derived from estimated demand functions by inverting the relations, thereby expressing the prices consumers are willing to pay as functions of quantity demanded. The task addressed in the paper is isolation of the WTP for quality attributes embedded in the varieties. Two models based on the AIDS-specification are proposed and discussed. To illustrate the applicability of the models, the case of five varieties of eggs is presented. It is found that Danish consumers are willing to pay a relatively high premium for improved animal welfare and organic production methods and somewhat less for food safety.     

Design of Digital Agricultural Extension Tools: Perspectives from Extension Agents in Nigeria

Given the marked heterogeneous conditions in smallholder agriculture in Sub-Saharan Africa, there is a growing policy interest in site-specific extension advice and the use of digital extension tools to provide site-specific information. Empirical ex-ante studies on the design of digital extension tools and their use are rare. Using data from a choice experiment in Nigeria, we elicit and analyze the preferences of extension agents for major design features of ICT-enabled decision support tools (DSTs) aimed at site-specific nutrient management extension advice. We estimate different models, including mixed logit, latent class and attribute non-attendance models. We find that extension agents are generally willing to use such DSTs and prefer a DST with a more user-friendly interface that requires less time to generate results. We also find that preferences are heterogeneous: some extension agents care more about the effectiveness-related features of DSTs, such as information accuracy and level of detail, while others prioritise practical features, such as tool platform, language and interface ease-of-use. Recognising and accommodating such preference differences may facilitate the adoption of DSTs by extension agents and thus enhance the scope for such tools to impact the agricultural production decisions of farmers.