Willingness to Pay to Reduce Mortality Risks: Evidence from a Three-Country Contingent Valuation Study

Valuing a change in the risk of death is a key input into the calculation of the benefits of environmental policies that save lives. Typically such risks are monetized using the Value of a Statistical Life (VSL). Since the majority of the lives saved by environmental policies are those of older persons, there has been much recent debate about whether the VSL should be lower for the elderly to reflect their fewer remaining life years. We conducted a contingent valuation survey in the UK, Italy and France designed to answer this question. The survey was administered in these three countries following a standardized protocol. Our results suggest that the VSL is €1.022 million or €2.264 million, depending on whether we use median or mean WTP. The VSL is not significantly lower for older persons, but is higher for persons who have been admitted to a hospital or emergency room for cardiovascular and respiratory problems. Income is positively and significantly associated with WTP. The income elasticities of the WTP increase gradually with income levels and are between 0.15 and 0.5 for current income levels in EU countries. We use the responses to the WTP questions to estimate the value of an extension in remaining life expectancy. The value of a loss of one year’s life expectancy is €54,000 or €163,000.     

Existence Value and the Contingent Valuation Method

People express concern about the possible extinction of animal species which they will never see, about damage to wilderness areas they will never visit, and so on. Such concerns are often interpreted by economists in terms of 'existence' or 'passive use' values. Three views have been proposed regarding the appropriate way of dealing with existence values in benefit-cost analysis. First, the existence values and concerns about environmental preservation that are not related to use may be disregarded. Second, concerns about environmental preservation may be taken into account, but not interpreted as existence values or evaluated in monetary terms. Third, the benefit-cost analysis may be modified to incorporate monetary estimates of existence values. Advocates of the third approach have developed a range of techniques for eliciting existence values, collectively referred to as the contingent valuation method. In this paper, the concept of existence value and the techniques of contingent valuation are surveyed, with the aim or providing a basis for comparisons of the three approaches described above.     

Induced-Value Tests of Contingent Valuation Elicitation Mechanisms

Using an induced-value experimental design that varies whether values for a “good” are certain or uncertain and whether payment is real or hypothetical, this study investigates issues of demand revelation, hypothetical bias, and value uncertainty for four elicitation mechanisms used in contingent valuation surveys: dichotomous choice, dichotomous choice with follow-up certainty question, payment card, and multiple-bounded discrete choice. For all elicitation mechanisms, we find no evidence of hypothetical bias: voting decisions do not vary systematically when payment is hypothetical versus when it is real. Under all design conditions we find the fewest deviations between stated and induced values and the strongest evidence of demand revelation with dichotomous choice. Stated uncertainty in dichotomous choice follow-up and multiple-bounded discrete choice questions does correlate with uncertain induced values, but the signal is noisy. We discuss the implications of our findings for the design of contingent valuation surveys.     

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.     

A Bayesian Approach to Double Bounded Contingent Valuation

In this paper we propose a Bayesian approach to model double bounded contingent valuation data. The double bounded elicitation method is interpreted as a two tier iterated process in which the subject is allowed to have a second thought about his/her valuation for the environmental good. Prior information is modelled from the answers to the first dichotomous choice question. The model is Quasi-Bayesian (Q-B) in that the prior distribution refers to mean willingness to pay while the likelihood function refers to the proportions of a multinomial distribution. This model is applied to empirical data from a contingent valuation survey involving the valuation expressed by European tourists for access to natural areas in the Canary Islands. Results show that point estimate of consumer surplus computed with the Q-B model does not differ substantially from single bounded model estimation. In addition, double bounded seems to be quite robust to the choice of the prior model of willingness to pay responses. Comparison with open ended suggests that the Q-B model might be useful to control for strategic response and starting point biases.     

Provision Point Mechanisms and Field Validity Tests of Contingent Valuation

Past field validity tests of contingent valuation have relied on voluntary contribution mechanisms to elicit actual willingness to pay, and may overestimate hypothetical bias because of free riding in the actual contributions. This paper argues that provision point mechanisms are a preferred alternative for field validity tests of contingent valuation because they increase the proportion of demand revealed in cases in which public goods can be provided in a step function. The results of a contingent valuation validity study of participation in a green electricity pricing program that uses a provision point mechanism are reported, and hypothetical open-ended and dichotomous choice responses are compared to actual participation. Calibration of hypothetical responses is also explored.     

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.     

Trust, Responsibility and the Interpretation of Contingent Valuation Results

Responses to contingent valuation questionnaires are contingent on respondent perceptions of trust and responsibility regarding aspects of the scenario presented to them. These issues can influence CV responses in several ways, with the net effect on WTP estimates depending on the relative prevalence of the different opposing effects in a given application. Whether such effects are to be considered biases, to be removed where possible, depends on the notion of validity one adopts. Whilst issues of trust and responsibility may pose little threat to predictive notions of validity, they are more problematic from a surplus validity, cost-benefit, perspective. Further discussion of the pros and cons of different validity notions for contingent valuation is required.     

Protesting and Justifying: A Latent Class Model for Contingent Valuation with Attitudinal Data

This article develops a latent class model for estimating willingness-to-pay (WTP) for public goods using simultaneously contingent valuation (CV) and attitudinal data to identify individuals with similar characteristics, such as WTP and protest attitudes. We find evidence that the answer to the CV question influences the responses to the attitudinal questions. In our case, this influence reflects rational behavior (budget constraint issues) and justification biases related to protest reasons, such as lack of trust in institutions or fairness issues with respect to the distribution of the burden of preservation. The results from our empirical application confirm the importance of accounting for those biases.     

Contingent Valuation and Lost Passive Use: Damages from the Exxon Valdez Oil Spill

We report on the results of a large-scale contingent valuation (CV) study conducted after the Exxon Valdez oil spill to assess the harm caused by it. Among the issues considered are the design features of the CV survey, its administration to a national sample of U.S. households, estimation of household willingness to pay to prevent another Exxon Valdez type oil spill, and issues related to reliability and validity of the estimates obtained. Events influenced by the study's release are also briefly discussed.     

Bid Design Effects in Multiple Bounded Discrete Choice Contingent Valuation

A potential concern in multiple bounded discrete choice contingent valuation surveys – where the respondent is asked to express voting certainty, rather than a simple yes or no, on a large number of payment amounts (bids) – is whether responses are influenced by the particular position of bids in the bid-voting panel rather than solely on the respondents willingness to pay (WTP). For instance, respondents may systematically state they would pay the first few bid amounts and not pay all subsequent bids – regardless of the actual dollar values. Such systematic bid design effects would suggest that this method does not provide a valid measure of WTP. Using a split-sample survey, we compare responses to three different bid arrays that have an identical minimum bid, maximum bid, and number of bids. Using nonparametric estimation techniques, we find that estimated WTP distributions and corresponding welfare measures are not statistically different across survey samples.     

Improving the Performance of Contingent Valuation Studies in Developing Countries

This paper discusses three main reasons why so many of the contingentvaluation studies conducted in developing countries are so bad. First,the contingent valuation surveys themselves are often poorly administeredand executed. Second, contingent valuation scenarios are often very poorlycrafted. Third, few CV studies conducted in developing countries aredesigned to test whether some of the key assumptions that the researchermade were the right ones, and whether the results are robust with respectto simple variations in research design and survey method. The paper concludesthat research on stated preference methods in developing countries iscritically important to the successful implementation of these methodsbecause (1) there is no empirical evidence to suggest that rapid,”streamlined” CV surveys yield reliable, accurate results, and (2)there is a significant risk that the current push for cheaper, simplerCV studies could discredit the methodology itself. Moreover, the policydebates to which CV researchers are asked to contribute are often oftremendous importance to the well-being of households in developingcountries. Because the costs of policy mistakes can prove tragic, itis critical that VC researchers push for excellence in this researchenterprise and that funding agencies think more carefully about thevalue of policy-relevant information in the fields in which thecontingent valuation method is being used to study household preferencesand behavior (e.g., water and sanitation services, urban air pollution,soil erosion, deforestation, biodiversity, watershed management,ecosystem valuation, vaccines for the poor).     

Addressing Negative Willingness to Pay in Dichotomous Choice Contingent Valuation

This paper has four purposes. First, we outline the controversy surroundingthe issue of negative willingness to pay (WTP)in contingent valuation (CV) studies. Second,we use Monte Carlo simulation to examine theperformance of alternative distributionalassumptions in estimating WTP in the presenceof varying proportions of the populationholding negative WTP values. We focus ondichotomous choice CV (DC-CV), where negativeWTP values may be especially difficult todetect. Third, we extend the simulation toinvestigate the performance of the mixturemodels that have recently been proposed forhandling/identifying non-positive WTP values. Fourth, we extend the simulation to investigatethe performance of the nonparametric lowerbound Turnbull approach. Results indicate thatthe relative performance of the DC-CV modelingalternatives evaluated here, which assumepositive WTP, varies across the simulationsetting (e.g., proportion of negative WTP); butnone can be said to reasonably ``solve' theproblem ex post. This underscores theimportance of ex ante efforts to identify ifnegative WTP is likely to be prominent in agiven valuation setting. In such cases,appropriately handling negative WTP must beaddressed through ex ante survey design andmodeling choices that allow negative WTP.     

Combining Contingent Valuation and Choice Experiments. A Forestry Application in Spain

When many good variants are to be valued, like in several forest management programs which differ in the attribute levels, the Contingent Valuation Method may not be a practical option, given the cost and time involved to value each variant separately. There are at least three alternative procedures in such situations. One (i) is to apply an attribute based valuation method like a Choice Experiment (CE); another (ii) is to conduct a CVM and a CE exercise and estimate a joint model; a third one (iii) is to use the CVM estimates to value a base scenario, and then use the CE results to adjust the CVM estimates for any new different scenario. A numerical simulation and an empirical application to an afforestation program in Spain show that the latter is the procedure that yields closer values to the CVM estimations, followed by (ii).      

The Economic Value of Air-Pollution-Related Health Risks in China: A Contingent Valuation Study

The economic value of preventing adverse health effects related to air pollution is estimated using contingent valuation in three diverse locations in China. Values are estimated for three health endpoints: cold, chronic bronchitis, and fatality. Alternative statistical models are tested to study their impact on estimated willingness to pay (WTP) and on the relationship between WTP and respondent characteristics. Using the official exchange rate, the sample-average median WTP to prevent an episode of cold ranges between US$3 and US$6, the WTP to prevent a statistical case of chronic bronchitis ranges between US$500 and US$1,000, and the value per statistical life ranges between US$4,000 and US$17,000. Estimated mean values are between two and thirteen times larger. Our estimates are between about 10 and 1,000 times smaller than estimates for the US and Taiwan using official exchange rates. Indoor air quality, measured for a subset of respondents, shows no consistent relationship with WTP.     

Income Treatment Effects in Contingent Valuation: The Case of the Swedish Predator Policy

This paper provides case study evidence on two relevant issues in estimating the relationship between WTP and income using contingent valuation: (1) the choice of income measure; and (2) the modelling choice. Addressing these issues, a sensitivity analysis is performed on a dataset concerning implementation of the Swedish predator policy. The results show that the estimated income-elasticity of WTP varies between 0.12 and 0.40 for the models estimated. The main conclusion drawn from the analysis is that controlling for the number of adults in the household is important for finding a significant income effect, when the household income measure is used. Besides this finding the empirical analysis finds little support for the hypothesis that the choice of income measure and modelling assumptions significantly influence the overall model fit.     

Modelling Winners and Losers in Contingent Valuation of Public Goods: Appropriate Welfare Measures and Econometric Analysis

Contingent valuation is now the most widely used method for valuing non-marketed goods in cost-benefit analysis. Yet, despite the fact that many externalities manifest themselves as costs to some and benefits to others, most studies restrict willingness to pay to being non-negative. This can result in significant errors in policymaking. This paper examines the importance of this, explores appropriate welfare measures for assessing losses and gains, demonstrates how these can be elicited explicitly, highlights the sensitivity of the results of such studies to the econometric specification employed and suggests ways of dealing with it. Finally, the implications for policy are examined.     

Parametric and Semi-Nonparametric Estimation of Willingness-to-Pay in the Dichotomous Choice Contingent Valuation Framework

Standard procedures for extractingwillingness-to-pay (WTP) from dichotomouschoice CV questionnaires rely heavily uponparametric assumptions regarding thedistribution and form of WTP in the sampledpopulation. However, theory provides littleguidance regarding which parametricspecification to use and the resulting WTPestimates can be sensitive to the selectionsmade. Here we compare and contrast severalparametric and semi-nonparametric estimatorsthat have been proposed in the literature,examining the sensitivity of the resulting WTPestimates to the underlying distribution ofpreferences and the estimation procedureemployed.     

意愿调查法在我国遗产资源价值评价领域的应用与研究进展

从中国知网选取97篇相关论文作为样本,从研究领域、主要发表期刊、所属学科、具体研究内容、研究过程、关键技术等方面进行了统计分析,对使用CVM在遗产价值评价方面的研究进行了梳理、述评,并对当前研究中存在的问题进行评析,旨在明晰CVM在遗产资源价值评价中的研究现状及发展进程.     

A Semi-parametric Estimator of Willingness-to-pay Applied to Dichotomous Choice Contingent Valuation Data

The use of dichotomous choice questions (Are you willing to pay $x?) has been advocated as superior to open ended questions (What would you be willing to pay?) in contingent valuation studies of non‐market goods. A supplementary dichotomous choice question, raising or lowering the bid price depending on the initial response, gives increased precision. However, a problem with these methods is that identifying the mean willingness to pay (WTP) is more complex, and often conditional on making a distributional assumption. This paper will present a semi‐parametric method for estimating WTP without invoking any such assumptions, using the interval inherent in the double bounded format, and based on estimating the underlying hazard function for the distribution of WTP. An advantage of the approach over other non‐parametric methods is that it allows one to include respondent characteristics as determinants of the individual decisions, and does so within a computationally straightforward framework.