The impact of offering two versus three alternatives in choice modelling experiments

Researchers designing choice modelling experiments have some latitude over the number of choice alternatives that can be offered in each choice set. There is some evidence that design dimensions, including the number of alternatives available in each choice set, can influence model outcomes. A key issue is whether referendum formats with binary options are preferable to choice sets with multiple alternatives.A choice modelling experiment was performed where questionnaires delivered to two split samples differed only according to whether two or three alternatives were offered to respondents in each choice set. The results indicate that more robust models could be constructed from the three-alternative split compared to the two-alternative split. One reason for the difference is that respondents tended to display serial non-participation in the two-alternative format, choosing an alternative consistently without regard for changes in the attributes. For practitioners of the CM technique, the results suggest that it may be preferable to offer more than two alternatives in a choice set that includes a status quo option.     

Internal validity in discrete choice experiments: varying the position of the price attribute

This article presents an analysis of internal validity in discrete choice experiments. Prior studies have analysed the importance of the order of attributes within a multiple choice context, but few have specifically analysed the importance of the location of the price attribute. The internal validity was analysed while considering variations in the position of the price attribute in the choice cards. Results show differences in the estimates of willingness to pay according to the price-location version used: at the beginning, in the middle or at the end of the choice card.     

Provided and perceived status quo in choice experiments: Implications for valuing the outputs of multifunctional rural areas

This article presents a choice experiment analyzing multifunctional rural development policies targeting conservation and recovery of environmental, social and cultural assets. In choice experiments a base alternative is usually included in order to estimate the welfare change associated to policy proposals. This study is concerned with the much neglected issue of the impact on policy analysis of the definition of a ‘status quo’ alternative either as an objective assessment by experts, or as a self-reported perception by respondents. Convergent validity analysis and prospective policy scenarios show a significant impact of different status quo specifications on individuals' preferences and related welfare measures when complex and unfamiliar biophysical systems are involved in policy analysis and evaluation.     

Preferences with and without prices - does the price attribute affect behavior in stated preference surveys?

The experimental as well as the non-market valuation literature include several examples of how an introduced price can affect behavior in otherwise not expected ways. It has become standard to include a price vector as an attribute in choice experiments, something that enables us to estimate a marginal willingness to pay for other attributes. We test the impact on preferences by an inclusion of a price in a choice experiment. Preferences are affected, as might be expected. However, also the relative ranking of individual attributes is affected.      

Quantifying public preferences for agri-environmental policy in Scotland: A comparison of methods

This paper compares two methods for determining policy priorities for reform of Scottish agricultural support. Multifunctional agriculture attempts to establish a new balance between traditional commodity support and payment for the production of non-market goods and services that are increasingly demanded by the public. Supplying non-market goods presents particular problems for optimal policy design, not least the elicitation of consumer demand for those goods. From public focus groups, a range of attributes was derived as central to the Scottish public’s preferences for future agri-environmental reform. This information was then combined in two separate survey methods using the Analytical Hierarchy Process (AHP) and choice experiments (CE). Both applications suggest that the public has defined preferences and a willingness to pay (using general income taxation) to affect changes beyond the status quo, and that policy payments should be targeted towards both environmental and social benefits. The divergent preference orderings derived from the alternative methods can be considered in the light of previous methodological debates on question framing, bounded rationality and respondent uncertainty. We speculate about the validity of alternative methodologies for informing particular policy questions.     

国际制度的形式选择——一个基于国家间交易成本的模型

根据制度化水平的三个维度,国际制度安排的基本形式可分为非正式协议、自我实施的正式协议、一般的正式国际组织和超国家组织。那么,缔约国如何在上述国际制度安排形式之间进行选择?本文尝试从国家间交易成本的角度为这一问题提供一个解释模型。国家间交易成本包括国家间治理成本与国家间缔约成本两个部分。国家间治理成本随着制度化水平的提高而递减,国家间缔约成本随着制度化水平的提高而递增。缔约国在选择国际制度安排形式时,将在国家间治理成本与国家间缔约成本之间进行权衡。作为理性的国际行为主体,缔约国在交易收益给定的情况下,将选择使国家间交易成本最小化的国际制度安排形式。根据这一制度选择模型,本文进一步提出了分别涉及问题领域敏感性、国家同质性、透明度、资产专用性、不确定性和交易频率的六个假说。     

Willingness to accept compensation for the environmental risks of oil transport on the Amazon: A choice modeling experiment

This paper looks at the question of whether subsistence level/indigenous people place a value on the preservation of ecosystems independent of direct impacts of environmental change, such as impacts on their production activities. The economics literature generally suggests that non-use values don't exist among the poor and in the informal sector of the economy. We examine this issue through a choice modeling experiment. A survey was conducted of rainforest communities who live on the banks of the Amazon River (Rio Solimões), in the vicinity of proposed oil and gas pipelines. The data were analyzed in the choice modeling framework, revealing relatively high amounts of compensation that were necessary in order to accept the potential ecosystem damages associated with oil transport, even if the people were completely compensated for direct damages such as loss of access to productive resources. These results suggest that environmental quality is important for its own sake, a result that is very different from the implicit assumption among many economists.     

How Much is Too Much?

In a split sample design, we examine how the number of choice sets, design of the first choice set (context dependence), and the choice of attribute levels in the cost attribute affect the precision in the elicited preferences in otherwise completely identical choice experiment surveys. These issues are investigated for Swedish households’ marginal willingness to pay to reduce power outages. Our results indicate that neither the number of choice sets nor the design of the first choice set has a significant impact on estimated marginal willingness to pay, while the effect was significant for the additive scaling of the cost vector. At the end of the article we discuss the implications of our results on future developments and applications of choice experiments.      

Indices of biotic integrity in stated preference valuation of aquatic ecosystem services

Stated preference surveys often give minimal attention to distinctions between intermediate and final ecosystem services, leading to the potential for welfare estimates that overlook, misrepresent or double count associated values. This paper illustrates potential mechanisms through which multimetric indexes of the type developed in the ecological literature, here an index of biotic integrity, can be used within stated preference survey scenarios to both improve the validity of survey responses and provide otherwise unavailable information on willingness to pay for intermediate and final ecosystem services. We illustrate the approach using a choice experiment application to the restoration of migratory fish in a Rhode Island watershed. Where assumptions of the model hold, results can allow transparent disentanglement and estimation of marginal values for both intermediate and final ecosystem services.     

Using choice question formats to determine compensable values: The case of a landfill-siting process

Siting noxious facilities, such as community landfills, is a challenging problem for local planners who recognize the importance of economic efficiency and equity, political acceptance, and meeting federal regulatory standards. Meeting these criteria requires technical and socio-economic analyses in conjunction with public input. Planners may also recognize that political acceptance requires compensation for the host community, either in the form of monetary or in-kind transfers. Following Breffle and Rowe [Breffle, W.S., Rowe. R.D., 2002. Comparing choice question formats for evaluating natural resource tradeoffs. Land Econ. 78 (2), 298–314], we use a “resource-to-resource” paired-comparison survey method to estimate compensatory values associated with an in-county landfill for both the host and non-host communities. Our results indicate that while a host-community household's minimum willingness to accept payment for hosting a landfill may exceed a non-host-community household's maximum willingness to pay, a large difference in population sizes between the two communities enables the landfill to pass a Kaldor potential compensation test.     

Endogenous participation in charity auctions

Data from a recent field experiment suggests that differences in participation rates are responsible for much of the variations in charity auction revenues across formats. We provide a theoretical framework for the analysis of this and other related results. The model illustrates the limits of previous results that assume full participation and introduces some new considerations to the choice of auction mechanism. It also implies, however, that the data cannot be explained in terms of participation costs alone: there must exist mechanism-specific obstacles to participation.     

Validity Tests of Benefit Transfer – Are We Performing the Wrong Tests?

The validity of environmental benefit transfer has been tested on numerous occasions assuming classical null hypothesis of equality. We argue against this assumption on the basis of theory, which clearly indicates that environmental benefits should be assumed to vary from context to context. We suggest the use of equivalence testing as a more appropriate and a clear compliment to the shortcomings of classical tests. Equivalence tests test the null hypothesis of difference between the original and transferred value estimates. Equivalence tests also combine the concepts of statistical significance and policy significance into one test, by defining an acceptable transfer error prior to the validity test. The results of a published study on validity of benefit transfer are reversed when subjected to an equivalence test.JEL classifications: Q26, C12     

Estimating non-market environmental benefits of the Conversion of Cropland to Forest and Grassland Program: A choice modeling approach

The non-market values of the environmental benefits derived from the Conversion of Cropland to Forest and Grassland Program (also known as the Grain for Green Program and the Sloped Land Conversion Program) in the Loess Plateau region of North West China were estimated using choice modeling both on-site in Xi'an and Ansai and off-site in Beijing. Separate choice models were estimated for the three sites and the results compared. Significant differences were found between the implicit price estimates derived from the multinomial logit (MNL) model and the random parameter logit (RPL) model for some environmental attributes. Based on the results from the RPL models, the average willingness to pay per respondent household in Beijing was CNY882.56 (USD109.44) each year for the environmental improvements on the Loess Plateau provided by the Program, a payment level significantly higher than the comparable estimates of CNY342.56 (USD42.48) in Xi'an and CNY388.08 (USD48.12) in Ansai.     

Revealing Differences in Willingness to Pay due to the Dimensionality of Stated Choice Designs: An Initial Assessment

Stated choice (SC) methods are now a widely accepted data paradigm in the study of the choice responses of agents. Their popularity has spawned an industry of applications in fields as diverse as transportation, environmental science, health economics and policy, marketing, political science and econometrics. With rare exception, empirical studies have used a single SC design, in which the numbers of attributes, alternatives, choice sets, attribute levels and ranges have been fixed across the entire design. As a consequence the opportunity to investigate the influence of design dimensionality on behavioural response has been denied. Accumulated wisdom has promoted a large number of positions on what design features are specifically challenging for respondents; and although a number of studies have assessed the influence of subsets of design dimensions, there exists no single study (that we are aware of) that has systematically varied all of the main dimensions of SC experiments. This paper reports some initial findings on what influences, in aggregate, specific design configurations have on the mean willingness to pay for specific attributes using a Design of Designs (DoD) SC experiment in which the ‘attributes’ of the design are the design dimensions themselves. The design dimensions that are varied are the number of choice sets presented, the number of alternatives in each choice set, the number of attributes per alternative, the number of levels of each attribute and the range of attribute levels. The empirical evidence, using a sample of respondents in Sydney choosing amongst trip attribute bundles for their car commuting trip, suggests that, within the boundaries of design dimensionality investigated, mean estimates of WTP for travel time savings in the aggregate cover a range that is appropriate for reporting a global mean and a set of meaningful values for sensitivity testing in project appraisal and demand prediction. When these aggregated mean estimates are conditioned on all design dimensions we do not find any systematic differences due to specific design dimensions; however when each design dimension is assessed without controlling for the other dimensions we find evidence to support differences in aggregate mean WTP attributable to the number of attributes per alternative and the number of alternatives in a choice set. Research funded under the Australian Research Council Large Grants Scheme, Grant A00103962.     

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.

理性选择向非理性选择转化的行为分析

本文针对不确定条件下的人类选择行为提出一个新的可供研究的观点:人的非理性选择在很大程度上是由理性选择转化而来的。文章首先简要评说了早期行为经济学的动物实验和认知心理学,认为人的选择行为是理性和非理性的同构;继而,通过解析丹尼尔·卡尼曼等人创立的前景理论所蕴涵的理性向非理性选择转化的思想,构建了这种转化的抽象模型;最后,作为对本文分析观点的一种联系实际的论证,研究了金融市场中的非理性选择以说明这种转化现象的客观存在。本文的分析可视为对行为经济学非理性选择理论之深邃见解的一种挖掘。     

Social capital access and entrepreneurship

We investigate the effect of social capital access on entrepreneurship. Social capital helps entrepreneurs to overcome resource constraints. This is especially important in small communities where we often see a lack of market-oriented institutions such as venture capital firms. Entrepreneurs gain access to social capital via club memberships. Combining differences in the number of individual club memberships with differences in the importance of social capital across communities, we identify a causal small community mark-up effect of individual club memberships on entrepreneurship. Assuming that unobserved heterogeneity that might influence both the individual's selection into clubs and the occupational choice to be an entrepreneur is independent of community size, we find that the effect of club membership on the propensity to be an entrepreneur is 2.6 percentage points larger in small communities than in large communities. Robustness tests support the validity of our identifying assumption and results.     

Choice Consistency and Preference Stability in Test-Retests of Discrete Choice Experiment and Open-Ended Willingness to Pay Elicitation Formats

This study tests the temporal stability of preferences, choices and willingness to pay (WTP) values using both discrete choice experiment (DCE) and open-ended (OE) WTP elicitation formats. The same sample is surveyed three times over the course of two years using each time the same choice sets. Choice consistency is positively correlated with choice certainty and choice complexity. The impact of choice complexity fades away in time, most likely as a result of learning and preference refinement. Although the OE WTP values remain stable over a time period of 2 years as in previous stated preference studies, DCE based WTP measures differ significantly, suggesting their use in benefits transfer may be limited.     

Valuations of aircraft noise: experiments in stated preference

The aim of this paper is to report new evidence relating to residents’ valuations of aircraft noise in three countries with an emphasis on a comparison of the valuations obtained using two contrasting approaches. One might be regarded as a standard stated choice approach offering pairwise comparisons of two alternatives characterised by a limited number of attributes. The other choice format adopted is innovative in drawing inspiration from the priority evaluator approach to embed aircraft movements alongside a wide range of other local factors that impact on residents’ quality of life. The paper addresses the differences in the results of the two approaches and explores the possible explanations for these variations. Although not conclusive, there is a suspicion that strategic bias may have influenced the results and we urge further research regarding incentives to such bias.     

The Validity of Environmental Benefits Transfer: Further Empirical Testing

This paper provides further empirical evidence of the validity of environmental benefits transfer based on CV studies by expanding the analysis to include control factors which have not been accounted for in previous studies. These factors refer to differences in respondent attitudes. Traditional population characteristics were taken into account, but these variables do not explain why respondents from the same socio-economic group may still hold different beliefs, norms or values and hence have different attitudes and consequently state different WTP amounts. The test results are mixed. The function transfer approach is valid in one case, but is rejected in the 3 other cases investigated in this paper. We provide further evidence that in the case of statistically valid benefits transfer, the function approach results in a more robust benefits transfer than the unit value approach. We also show that the equality of coefficient estimates is a necessary, but insufficient condition for valid benefit function transfer and discuss the implications for previous and future validity testing.