Construct Validity of Dichotomous and Polychotomous Choice Contingent Valuation Questions

In this note we conduct construct validity tests for dichotomous choice (DC) and polychotomous choice (PC) contingent valuation questions. Contrary to previous results, we find that DC and PC estimates of willingness to pay are theoretically valid, convergent valid, and similar in terms of statistical precision. Similar to previous results, PC respondents are less sensitive to information than DC respondents. We conclude that DC and PC valuation questions are construct valid for this study. Sequential PC valuation questions could be used in studies where obtaining information about the certainty or intensity of respondent preferences would be useful.     

The Worth of a Possum: Valuing Species with the Contingent Valuation Method

The focus of this paper is on methods of assessing the value peopleplace on the conservation of species for use in policy making. Of principalinterest is the relatively new methodology of contingent valuation, whichis a method for asking people directly about their preferences. The paperpresents an application of the contingent valuation method to theconservation of an endangered species in the State of Victoria, Australia.The results emphasise the importance of careful survey design,implementation and analysis as well as the precise definition of theenvironmental good being valued. Consequently, the contingent valuationmethod does provide information relevant to decision making processesbased on monetary economic considerations. Thus, in orthodox economicterms it makes sense to conserve species – but there are other moral andethical grounds for conserving species as well.     

Testing Temporal Reliability and Carry-over Effect: The Role of Correlated Responses in Test-retest Reliability Studies

Test-retest studies help establish the reliability of contingent valuation (CV) responses but must confront the problem that the initial response may influence subsequent responses, and thus weaken conclusions. We develop a model that tests the influence of heterogeneous preferences and previous responses. By estimating a model of sportfishing, we show that correlation between answers to a CV question is induced by heterogeneous preferences.     

Local Perception of Public Goods: Recent Assessments of Willingness-to-pay for Endangered Species

A contingent valuation mail survey was administered in late 2001 to better understand current public opinion about controversial endangered species preservation in Orange County, California. Questionnaire design focused on additional taxes residents would be willing to pay to support recovery plans. Habitat and recovery of a single species, the Riverside fairy shrimp, is valued at around $25 per household, and the valuation is significantly changed by the higher scope of the public good provided, with an annual willingness-to-pay of around $50–60 per household for all local endangered species. Across the whole county, the public valuation of biodiversity is substantial yet probably could not fund necessary land acquisition for critical habitat, so continued national support for species preservation remains logical. (JEL Q51 , Q57 , Q58 )     

Relating environmental attitudes and contingent values: how robust are methods for identifying preference heterogeneity?

We assess the importance and robustness of cluster analysis and latent class analysis as methods to account for unobserved heterogeneity. We provide a critique and comparison of both methods in the context of measuring environmental attitudes and a contingent valuation study involving endangered species. We find strong evidence of robustness for these methods: group characterization and assignment of individuals to groups are similar between methods, and willingness-to-pay estimates are consistent. In addition, there are significant differences in willingness-to-pay across environmental attitudinal groups, and we find that accounting for unobservable heterogeneity provides a significantly better fitting model.     

Do emotions matter? Coherent preferences under anchoring and emotional effects

Emotions can affect individuals' preferences and economic behavior. In this paper we consider the relationship between emotions and anchoring effects in non-market valuation. The findings show that although anchoring effects are relevant, elicited preferences are coherent, in the sense that they are sensitive to changes in the dimension of the good. Additionally, it is found that the relationship between emotional intensity and the level of anchoring is U-shaped, with anchoring declining as emotional intensity rises until a minimum is reached. Thus, preferences can be substantially less affected by anchoring effects if emotional intensity deviates from extreme values. Finally, it is found that the degree of sensitivity to scope is influenced by the level of emotional load involve in the valuation task.     

Interview Effects in an Environmental Valuation Telephone Survey

Because of the lack of markets for many environmental services, economists have turned to valuation surveys to estimate the value of these services. However, lack of market experience may cause respondents in valuation surveys to be more prone to interview effects than they would be with other opinion surveys. Without reference to market price or experience, respondents are less likely to have well-defined preferences, which may cause respondents to be more easily influenced by the interview process and characteristics of the interviewer. In this paper, we investigate interview effects in a random digit dial telephone survey of recycling valuation and behavior. Following previous research in both psychology and survey methodology, we test the direct effects of interviewer gender and race, as well as the interaction effects between interviewer and respondent characteristics. Using data from 130 interviewers and 1,786 interviewees, we apply a hierarchical regression model that accounts for the clustering of interviews and controls for a variety of other confounding variables. We confirm the existence of both direct and conditional interviewer effects. Respondents state higher willingness to pay when interviewed by white or female interviewers than by non-white or male interviewers. There were also significant interaction effects between interviewer and respondent characteristics. The directions of the interviewer effects are consistent with previous survey research and social psychology theories. We also identify some non-traditional interview process factors that have an influence on survey responses.     

Qualitative valuation of environmental criteria through a group consensus based on stochastic dominance

This paper introduces a qualitative valuation method to elicit stakeholders' intensities of preferences for a complex environmental issue and multiple social groups. Environmental valuation studies have shown that in any complex environment with a diversity of environmental services, stakeholders have difficulties using a monetary valuation to make trade-offs between different environmental services. Stated preference methods such as the Contingent Valuation Method (CVM) have been criticised for their individualistic format and assumptions of commensurability between environmental criteria. To alleviate both of these criticisms, we propose a qualitative valuation method. The method contains a discursive step to allow stakeholders to discuss and construct a list of environmental criteria and alternative plans. The list of criteria and plans is subsequently used by a group of experts to formulate an Impact Matrix (IM), which is to be used in the succeeding individualistic steps of the methodology. The first individualistic step consists of asking the stakeholders to rank Alternative Impacts (AIs) in the IM for each single criterion. The stakeholders are then asked to express intensities of their preferences through pairwise comparisons between the AIs of the constructed rank order on each single criterion. These intensities are expressed on a qualitative scale. Subsequently, to provide social intensities of preferences, a social preference (social rank order) is first determined for each single criterion. We propose to use the median value among the intensities of preferences as the social intensity of preference by assuming interpersonal comparability and taking into account stochastic monotonocity. This is a pre-processing step, which allows us to reach social intensities of preferences in the Lar rangeland (Iran), where several social groups have conflicting interests on rangeland services, leading to conflicting preferences on environmental criteria.     

Mixing methods within stated preference environmental valuation: choice experiments and post-questionnaire qualitative analysis

Assessing public preferences for natural resources is a difficult task. The complexity of the research problem has encouraged practitioners to adopt qualitative approaches as exploratory and diagnostic tools within the conventionally more quantitative stated preference research. Building on best practice from previous studies, this paper reports the findings of post-questionnaire focus group analysis, investigating the adequacy of a choice experiment (CE) valuation exercise and its public acceptability. The specifics of the scenario and design choices are shown to markedly reduce problems of charity like and bid-realism/fair-share responses, observed in previous studies, and significant sensitivity to good characteristics is observed. However, a less tractable problem of valuing unfamiliar goods remains, with insights given regarding public acceptability and the usefulness of the findings to environmental decision-making.     

The effect of individual ‘ability to choose’ (scale heterogeneity) on the valuation of environmental goods

Environmental valuation methods, such as choice experiments, are increasingly being used to value complex and often unfamiliar environmental goods. A potential risk is that some survey respondents may not be capable of developing and expressing preferences for such goods. The noise from these individuals may then conceal the well-defined preferences of other respondents and affect valuation estimates. We address this problem by estimating a range of models that accounts for scale heterogeneity (which we interpret as a respondent's ability to choose: ATC) and taste heterogeneity. These models are applied to two case studies: amenity from coastal defence and biodiversity. In both case studies, model fit was improved in a scale-heterogeneity multinomial-logit (S-MNL) model (compared to a standard MNL model) suggesting the accounting for ATC (scale heterogeneity) improved preference revelation. A mixed multinomial-logit (MIXL) model outperformed the S-MNL model suggesting that accounting for taste heterogeneity was also important. However, a generalised multinomial-logit (G-MNL) model improved model fit over the MIXL model only for the biodiversity data suggesting that for these data both taste heterogeneity and ATC were important. We conclude that accounting for ATC can improve the reliability and robustness of the results when valuing complex or unfamiliar environmental goods.     

Willingness to Pay and Sensitivity to Time Framing: A Theoretical Analysis and an Application on Car Safety

Stated preference (SP) surveys attempt to obtain monetary values for non-market goods that reflect individuals’ “true” preferences. Numerous empirical studies suggest that monetary values from SP studies are sensitive to survey design and so may not reflect respondents’ true preferences. This study examines the effect of time framing on respondents’ willingness to pay (WTP) for car safety. We explore how WTP per unit risk reduction depends on the time period over which respondents pay and face reduced risk in a theoretical model and by using data from a Swedish contingent valuation survey. Our theoretical model predicts the effect to be nontrivial in many scenarios used in empirical applications. In our empirical analysis we examine the sensitivity of WTP to an annual and a monthly scenario. Our theoretical model predicts the effect from the time framing to be negligible, but the empirical estimates from the annual scenario are about 70 % higher than estimates from the monthly scenario.     

Current Air Pollution and Willingness to Pay for Better Air Quality: Revisiting the Temporal Reliability of the Contingent Valuation Method

Environmental and Resource Economics - In this study we examine whether and why preferences for environmental quality improvements depend on current quality. We conducted contingent valuation...     

External Tests of Scope and Embedding in Stated Preference Choice Experiments: An Application to Endangered Species Valuation

A criticism often levied against stated preference (SP) valuation results is that they sometimes do not display sensitivity to differences in the magnitude or scope of the good being valued. In this study, we test the sensitivity of preferences for several proposed expanded protection programs that would protect up to three US Endangered Species Act-listed species: the Puget Sound Chinook salmon, the smalltooth sawfish, and the Hawaiian monk seal. An external scope test is employed via a split-sample SP choice experiment survey to evaluate whether there is a significant difference in willingness to pay (WTP) for protecting more species and/or achieving greater improvements in the status of the species. The majority of 46 scope tests indicate sensitivity to scope, and the pattern of scope test failures is consistent with diminishing marginal utility with respect to the amount of protection to each species. Further tests suggest WTP may be proportional to the number of species valued.     

Do people care about social context? Framing effects in dictator games

Many previous experiments document that behavior in multi-person settings responds to the name of the game and the labeling of strategies. With a few exceptions, these studies cannot tell whether frames affect preferences or beliefs. In three large experiments, we investigate whether social framing effects are also present in Dictator games. Since only one of the subjects makes a decision, the frame can affect behavior merely through preferences. In all the experiments, we find that behavior is insensitive to social framing. We discuss how to reconcile the absence of social framing effects in Dictator games with the presence of social framing effects in Ultimatum games.     

Economic valuation of species loss in the open sea

Although the oceans cover 70% of the surface of the planet few studies have considered the economic valuation of marine biodiversity, despite the importance of such information for marine management and conservation. This study uses a contingent valuation method to estimate the public's willingness to pay (WTP) to avoid loss in the number of marine species in the waters around the Azores archipelago. We estimated the marginal value associated with increased levels of species loss (10% and 25%) in five marine taxa (mammals, fish, algae, birds and invertebrates) and all marine species considered as a whole, via a face to face survey of residents and visitors to two Azorean islands. The results suggest small but statistically significant differences in the WTP to prevent losses in the different taxa (mammals = fish > birds = invertebrates = algae). The results also suggest a greater WTP to preserve all marine taxa as a whole, than for a series of individual marine taxa. The valuation of the ecosystem and taxa may be influenced by the maritime culture of the respondents, but despite this, the findings challenge the commonly held premise that charismatic taxa have a disproportionately strong influence on WTP, and they provide important insights into human preferences for biodiversity conservation.     

Environmental Policy Theory Given Bounded Rationality and Other-regarding Preferences

Established environmental policy theory is based on the assumption of homo economicus. This means that people are seen as fully rational and acting in a self-regarding manner. In line with this, economics emphasizes efficient policy solutions and the associated advantages of price incentives. Behavioral economics offers alternative, more realistic views on individual behavior. In this paper we investigate opportunities to integrate bounded rationality and other-regarding preferences into environmental policy theory to arrive at recommendations for more effective policies. For this purpose, we will address decisions made under risk and uncertainty, intertemporal choice, decision heuristics, other-regarding preferences, heterogeneity, evolutionary selection of behaviors, and the role of happiness. Three aspects of environmental policy are considered in detail, namely sustainable consumption, environmental valuation and policy design. We pay special attention to the role of non-pecuniary, informative instruments and illustrate the implications for climate policy.     

Understanding environmental policy preferences: New evidence from Brazil

We examine the relationship between socio-economic factors and public opinion on environmental policies in Brazil, drawing on a survey conducted in June 2012. There are few systematic studies of the determinants of environmental preferences in emerging economies, and Brazil is a particularly interesting case because of its democratic political system, rapid economic growth, and importance for the global environment. In general, we find that the Brazilian public is highly supportive of environmental protection. To explain variation in environmental preferences, we focus on the effects of income and education. Many previous studies suggest that both should have positive effects, but the empirical evidence is mixed. Indeed, we find that income has no effect on environmental preferences. However, education is a strong predictor of environmental preferences. While college education is not necessary for environmental awareness, there is a large difference between Brazilians with primary and secondary education. For policy, the findings imply that investment in secondary education can raise environmental awareness, regardless of income levels.     

Choosing Between Internet and Mail Survey Modes for Choice Experiment Surveys Considering Non-Market Goods

In a choice experiment setup considering a non-market good, this paper adds to the literature on survey mode effects by providing evidence that internet surveys can be a viable alternative to traditional mail surveys when gathering feedback from a sample of respondents. The case study concerns preferences for protecting different types of landscape from road encroachment when building new motorways in Denmark. Two samples of respondents are surveyed—one by internet and one by mail. The performances of the two samples are compared over six different criteria; response rates, protest responses, demographics, preferences and WTP, estimation precision, and, finally, certainty in choice. Differences are observed for some of these criteria, implying that analysts should be aware that choosing internet over mail could be accompanied by a survey mode effect. However, the observed differences do not translate into significant differences in the unconditional WTP estimates. In most applied economic valuation studies of non-market goods, the main objective is in fact estimation of WTP. Hence, in the present case, the identified survey mode effects do not severely invalidate the applicability and continued use of the internet as a suitable means of collecting data for choice experiment economic valuation of non-market goods.     

Reducing protest responses by deliberative monetary valuation: Improving the validity of biodiversity valuation

This paper focuses on examining the validity of biodiversity valuation methodologies. The results of a group deliberation technique (deliberative monetary valuation) are compared to those derived from a contingent valuation (CV) survey using the same environmental topic. Evidence is here presented that DMV can address some of the limitations of CV; namely a prevalence for lexicographic preference ordering due to psychological reasons and the lack of a priori or well-formed preferences. Both of these methodological shortcomings can result in protest responses which decrease the external validity of results. It is common environmental valuation methodology practice to exclude protest responses from the analysis on the grounds that they are illegitimate choices, thus the sample and consequently the environmental valuation analysis may become less representative of the population. An advantage of the DMV methodology is that it was found to significantly reduce the rate of protest responses to less than half (from 29% to 13%). Furthermore, DMV significantly increased the proportion of positive bids but not the amounts contributed. In relation to preference formation issues, we suggest rethinking the current practice of the DMV method, and propose dedicating the entire initial discussion session to introducing the good outside of a valuation context.