The Impacts of Elicitation Context on Stated Preferences for Agricultural Landscapes

Statements of willingness to pay (WTP) have been shown to be dependent upon the framing of the hypothetical market. In this paper we investigate the effects of variations in the timing and location of choice experiment questions concerned with conservation of a UK national park, as research involving measurement of psychological well‐being suggests potential differences for the same individual dependent upon when and where preferences are elicited. We apply the choice experiment technique to the valuation of changes in upland agricultural and semi‐natural landscapes in the Peak District National Park in the UK, to investigate whether timing and location of elicitation (context) affects the value associated with changes in ecosystem services under different management regimes. Four treatments are employed – using the same sample of individuals answering the same choice scenarios – to measure WTP ex‐ante (off site), in situ (on site), and ex‐post at two different time intervals (off site). We show that our on‐site (in situ) treatment generates very different estimates of preferences than any of the off‐site treatments. That stated preferences associated with environmental goods are so context dependent may have implications for the use of stated preferences in policy analysis in terms of identifying how environmental policy is funded and the divergence in value attributed to sampling different populations.     

Consumer sorting and hedonic valuation of wine attributes: exploiting data from a field experiment

This article uses a novel experimental approach to measure consumer willingness to pay (WTP) for wine attributes. We invited customers of a local supermarket who had selected a bottle of wine to purchase to participate in a valuation experiment. Integrating their original wine choice into the experiment, each participant evaluated six alternative wines, generating a rich set of data on willingness to pay and consumer characteristics. The data from the experiment allow us to compare standard shelf price‐based wine attribute valuation estimates with estimates using WTP data and an increasing amount of information about individual consumers. The full model employs individual fixed effects to estimate WTP parameters without bias from consumer sorting or supply side influences. Our WTP estimates for wine attributes differ markedly from previous attribute value estimates. Consumers in our sample display clear and stable preferences for wine varieties, but less clear preferences for appellations. Our results suggest caution is needed in using market prices to estimate parameters of the consumer valuation function for product attributes.     

Examining demand for urban river rehabilitation in Indonesia: Insights from a spatially explicit discrete choice experiment

The demand for urban river rehabilitation can be measured through stated preference surveys such as choice experiments, providing information on the welfare estimates of a particular approach. We deploy such a technique in the context of plans to rehabilitate a major river in Jakarta, Indonesia. The current plan focuses on widening and canalizing the downstream segment of the river within Jakarta’s administrative boundary. We hypothesize that residents would demand (and thus be willing to pay for) additional components of an ecological rehabilitation program in the form of riverside park space and upstream forest conservation outside of Jakarta’s jurisdiction. We develop a spatially-explicit discrete choice experiment in which households register their preferences for channel widening, park space, forest conservation, and a monthly fee to fund the rehabilitation. Using mixed logit models we find significant and substantial demand for both park space and forest conservation, with a lower bound on the total willingness to pay (WTP) of greater than US $4 million per year for park space and nearly US $6 million per year to support reforestation in the upper catchment. These estimates are based on households within the catchment, but we find that demand did not seem to decay with distance so the upper bound on total WTP could be substantially higher. We also find that household income level has a strong effect on marginal WTP for forest conservation, minimal effect on marginal WTP for park space, and that location along the river influenced WTP for park space and channel widening. This provides further evidence that there is substantial demand for river rehabilitation in developing world cities, and that choice experiments can provide information relevant to land use planning.     

Stated Attribute Non‐attendance in Successive Choice Experiments

Attribute non‐attendance in choice experiments affects willingness‐to‐pay (WTP) estimates and therefore the validity of the method. A recent strand of literature uses attenuated estimates of marginal utilities of ignored attributes. Following this approach, we propose a generalisation of the mixed logit model, whereby the distribution of marginal utility coefficients of a stated non‐attender has a potentially lower mean and lower variance than those of a stated attender. Model comparison shows that our shrinkage approach fits the data better and produces more reliable WTP estimates. We further find that while reliability of stated attribute non‐attendance increases in successive choice experiments, it does not increase when respondents report having ignored the same attribute twice.     

Choice of Rice Production Practices in Ghana: A Comparison of Willingness to Pay and Preference Space Estimates

Rice has been identified as an important food security crop in Ghana. However, there is a production deficit and new technologies to reduce the deficit are not widely adopted. Although poor adoption by farmers’ is often linked to constraints such as access to information, farmers’ perceptions of the technologies are also important. We apply an advanced discrete choice experiment to evaluate farmers’ preferences for rice production practices. Specifically, we generate willingness to pay (WTP) estimates using willingness to pay space (WS) and compare these with values from the indirect or preference space (PS) method. Our modelling also accounts for the effects on WTP estimates of farmers’ stated attribute importance (SAI) information. Empirical results from WS and PS models reveal that on average, farmers value higher yields and are negatively affected by higher risk of crop failure and labour requirements. Comparing the performance of the two models, we find the WS model provides a superior fit to our data and reduces the likelihood of producing implausible WTP estimates. Further, SAI inclusion did not produce much variation in our WTP estimates.     

Heterogeneous Demand and Supply for an Insurance‐linked Credit Product in Kenya: A Stated Choice Experiment Approach

We employ a discrete choice experiment to elicit demand and supply side preferences for insurance‐linked credit, a promising market‐based tool for managing agricultural weather risks and providing access to credit for farmers. We estimate preference heterogeneity using primary data from smallholder farmers and managers of lenders/insurers combined with household socio‐economic survey data in Kenya. We analyse the choice data using maximum simulated likelihood and Hierarchical Bayes estimation of a mixed logit model. Although there are some similarities, we find that there is conflicting demand and supply side preferences for credit terms, collateral requirements, and loan use flexibility. We also analyse willingness to buy and willingness to offer for farmers and suppliers, respectively, for the risk premium for different attributes and their levels. Identifying the preferred attributes and levels for both farmers and financial institutions can guide optimal packaging of insurance and credit providing market participation and adoption motivation for insurance‐bundled credit product.     

Willingness to Pay for Rural Landscape Improvements: Combining Mixed Logit and Random‐Effects Models

This paper reports the findings from a discrete‐choice experiment designed to estimate the economic benefits associated with rural landscape improvements in Ireland. Using a mixed logit model, the panel nature of the dataset is exploited to retrieve willingness‐to‐pay values for every individual in the sample. This departs from customary approaches in which the willingness‐to‐pay estimates are normally expressed as measures of central tendency of an a priori distribution. Random‐effects models for panel data are subsequently used to identify the determinants of the individual‐specific willingness‐to‐pay estimates. In comparison with the standard methods used to incorporate individual‐specific variables into the analysis of discrete‐choice experiments, the analytical approach outlined in this paper is shown to add considerable explanatory power to the welfare estimates.     

On the use of flexible mixing distributions in WTP space: an induced value choice experiment

In this study, we use data from an induced value choice experiment to compare estimates from mixed logit models in willingness to pay (WTP) space using different parameter distributional assumptions. Specifically, we test differences in WTP estimates when using flexible parameter mixing distributions (i.e. Legendre polynomials, step functions and splines) and conventional parameter distributions (normal and lognormal). Similar WTP estimates are obtained. However, we observe that WTP estimates are statistically different from the induced value when conventional distributions are assumed, but they are not when more flexible distributions are assumed. This suggests that flexible distributions can provide more reliable WTP estimates.     

Investigating distance effects on environmental values: a choice modelling approach*

Analysis of the relationship between distance and willingness to pay (WTP) is important for estimation and transfer of environmental benefits. Several contingent valuation (CV) studies have investigated this topic, but results are mixed. This paper describes a choice modelling (CM) application that estimates distance effects on parameters of three environmental attributes. Combinations of these attributes create different management policies for native vegetation. The CM study is based on a sampling procedure that provides a geographically balanced sample and statistical tests to choose the best specification of the distance–WTP relationship. Welfare analysis shows that disregarding distance causes under‐estimation of individual and aggregated benefits and losses, seriously misdirecting resource allocation.     

Public Preferences and Willingness to Pay for Forest Disease Control in the UK

Invasive pests and diseases in trees impose a range of costs on society related to reductions in timber values, impacts on recreational opportunities and effects on forest biodiversity. These costs need to be considered when assessing control options and developing public policy. We investigate the preferences and willingness to pay of the UK general public for a range of forest disease control measures using a choice experiment with a sample of 605 people. Respondents were relatively well informed about general tree disease‐related issues, such as causes and general measures to minimise the risk of disease spread. They were less knowledgeable about specific tree diseases, with Dutch elm disease and chalara ash dieback being the most well known. We find that disease control programmes in publicly‐owned forests and forests owned by charitable trusts are more likely to be supported by the public than equivalent control programmes in privately‐owned and/or commercial forests. The nature of scientific uncertainty about diseases does not affect peoples’ preferences for disease control measures significantly. Higher respondent income, greater ex‐ante knowledge about tree diseases, and more frequent visits to forests are correlated with greater willingness to support publicly‐funded tree disease control programmes in forests. Better knowledge about tree diseases also improves the clarity of respondents’ choices. We find a negative sentiment against some disease control measures, such as clear felling of a forest, and chemical or biocide spraying. We conclude that there is significant public support for part‐financing forest disease control policies in the UK, but that this is conditional on forest ownership and the type of control measures used.     

Assessing Consumer and Producer Preferences for Animal Welfare Using a Common Elicitation Format

We assess pig farmers’ willingness‐to‐accept (WTA) higher farm animal welfare (FAW) standards and consumers’ willingness‐to‐pay (WTP) for thus enhanced standards. The analysis is based on discrete choice experiments with nearly identical choice sets for both farmers (N=140) and consumers (N=554). Based on preference estimates from a random parameter logit (RPL) model, supply and demand curves for high‐welfare pork in Germany are estimated and market equilibria are derived for alternative levels of FAW. We find that estimates of consumer WTP are significantly positive for all FAW attributes: consumers value more surface space per pig, more bedding and manipulable material, less surgical interventions and shorter transportation times. In contrast, our model revealed significant producer WTA estimates only for surface area per pig and the amount of bedding material on offer, but not for the other FAW attributes. Farmers who expect to continue farming and engage in direct marketing are more likely to adopt higher FAW standards. Male consumers and those who find price more important than brand, origin or taste are less likely to buy high‐welfare pork, as are consumers who never purchase organic meat products. Market simulations for high‐welfare pork indicate increasing divergence between demand and supply with rising FAW standards. We estimate a market share of 44.6% for pork produced in compliance with an entry‐level FAW programme with standards only slightly above the legal minimum. Programmes with more demanding standards are estimated to gain much smaller market shares.     

Comparing Serial,and Choice Task Stated and Inferred Attribute Non‐Attendance Methods in Food Choice Experiments

A number of choice experiment (CE) studies have shown that survey respondents employ heuristics such as attribute non‐attendance (ANA) while evaluating food products. This paper addresses a set of related methodological questions using empirical consumer data from a CE on poultry meat with sustainability labels. First, it assesses whether there are differences in terms of marginal willingness to pay estimates between the two most common ways of collecting stated ANA (serial and choice task level). Second, it validates the self‐reported ANA behaviour across both approaches. Third, it explores the concordance of stated methods with that of the inferred method. Results show that WTP estimates from serial‐level data differ from those from choice task‐level data. Also, self‐reported measures on choice task ANA are found to be more congruent with model estimates than those for serial ANA, as well as with inferred ANA.     

The impact of deal‐proneness on WTP estimates in incentive‐aligned value elicitation methods

Even after controlling for hypothetical biases, some incentive‐aligned value elicitation methods still produce different willingness‐to‐pay (WTP) estimates. In this study, we compare WTP estimates from three incentive‐aligned value elicitation methods: real choice experiment (RCE), real double‐bounded dichotomous contingent valuation (RCVM), and Becker–DeGroot–Marschak auction (BDM). We find that participants’ aggressiveness in obtaining low prices (i.e., “deal‐proneness”) influences WTP estimates in the BDM auction, but not those elicited from the RCE and RCVM. The participants with higher levels of deal‐proneness tend to submit lower bids in the BDM auction. The discrepancies in WTP estimates between different incentive‐aligned procedures are narrower for participants with lower levels of deal‐proneness. Our results indicate that the bids in BDM auctions may be understated and the auction mechanism may induce the “gambling behavior” of people who are deal‐prone. That is, whether the BDM auction is truly incentive‐aligned is again called into question. We also discuss the practical implications for food retailers.     

Value elicitation for multiple quantities of a quasi‐public good using open ended choice experiments and uniform price auctions

Choice experiments and experimental auctions have become popular mechanisms for estimating willingness to pay (WTP). However, these methods have primarily been used for estimating WTP for single units of goods. We analyze the results from experimental auctions and choice experiments in the context of multiple quantities of a quasi‐public good (animal welfare product). We show that the use of WTP values for a single unit of a product, a common practice in experimental valuation literature, can result in underestimation of aggregate demand. We use and compare open ended choice experiments (OECE), second price Vickrey auctions, and random Nth price auctions as mechanisms for valuing WTP. Our results also suggest that individual level demand estimates from OECE are less elastic than demand estimates from uniform price auctions.     

Are French consumers ready to pay a premium for eco‐labeled seafood products? A contingent valuation estimation with heterogeneous anchoring

Could the future French eco‐label for fresh seafood products find its place in the French market? This study employs a contingent valuation method to estimate French consumers’ willingness‐to‐pay (WTP) for eco‐labeled fresh seafood products. We exploit original data from a survey carried out in 2010, where 626 participants responded to a double‐bounded dichotomous choice model, through an ascending or descending bid system. Controlling for shift and anchoring effects in random effect probit models, we significantly improve estimation of WTP and its determinants for the three species studied (monkfish, lobster, sole), in particular when using heterogeneous anchoring. We show that WTP is positively correlated to respondents’ income, and also to their environmental concern, to living alone, to living far from the coast, and to trusting NGOs or public institutions more than producer organizations to implement an eco‐label. We also show that the mean price premiums do not differ between species. Finally, on average, the maximum premium consumers accepted to pay is approximately 10% of the product price.     

Convergent validity in contingent valuation: an application to the willingness to pay for national climate change mitigation targets in Germany

This stated preferences survey determines the willingness to pay (WTP) for climate change mitigation policies using a representative sample of the German population. WTP is compared across three valuation question formats in a split sample design: the dichotomous choice (DC) referendum, the dissonance minimizing (DM) referendum and the two‐way payment ladder (TWPL). The influence of multinational cooperation on WTP is assessed by variation in the hypothetical scenarios. We demonstrate that the DM referendum and the TWPL, two question formats that induce similar response incentives, yield equal mean WTPs. Multinational cooperation did not change WTP in any of the question formats. Implications for current contingent valuation practice are discussed.     

Spatial and Scope Effects: Valuations of Coastal Management Practices

We explore how values for environmental management in the Kimberley region of Australia respond to changes in spatial scale and attribute scope. A discrete choice experiment was conducted that included the impacts of management on marine no‐take areas, Aboriginal rangers, recreational facilities, and coastal development. A split sample single‐site design was used to estimate values for the Kimberley region as a whole, and for two separate smaller sub‐regions, allowing us to test for spatial preference heterogeneity. Management outcomes for different regions were displayed on a map to show respondents explicitly where outcomes would occur. We show that willingness to pay results are similar between the two smaller sub‐regions, and that willingness to pay for the attributes increased when management occurred at the larger geographical scale. However, respondents were somewhat insensitive to changes in the scope of the two cardinal attributes: area of no‐take and number of rangers. We discuss the implications of this spatial and scope insensitivity for choice experiment research.     

Consumers' Preferences for Nanotechnology in Food Packaging: A Discrete Choice Experiment

We examine consumers' preferences for chickens under different levels of foodborne health risk, animal welfare and pric attributes. We analyse how their preferences vary according to the risk reduction method. Our comparison is between risk reductions achieved by conventional improvements in the meat supply chain system (e.g. more stringent regulations and inspection regimes), and risk reductions achieved by food packaging nanosensors. Our comparison uses a two‐treatment discrete choice experiment in which each treatment sample is only presented with one of the risk reductions: either nanotechnology or conventional methods. We also investigate heterogeneity in preferences for two consumer groups: (i) consumers who usually buy conventional raw, whole chickens, and (ii) consumers who usually buy niche, welfare‐improved chickens, such as free‐range and organic. Our results show evidence of heterogeneity in preferences and willingness‐ to‐pay values of the both consumer groups. We find that consumers, on average, prefer raw, whole chicken with a lower risk of food poisoning, better animal welfare, and lower costs, regardless of the presence of nanosensors. Although consumers in general showed no strong preferences towards or resistance to nanotechnology, those who buy chickens with better animal welfare, on average, showed higher WTP for food risk reduction and animal welfare relative to conventional chicken consumers.     

Predicting versus testing: a conditional cross‐forecasting accuracy measure for hypothetical bias*

A measure of hypothetical bias, or the divergence between stated and revealed preferences, based on conditional cross‐forecasting accuracy is suggested, based on out‐of‐sample prediction accuracy when estimates from stated preference data are used in place of those from actual choices, and vice versa. We describe an application of this measure to assess hypothetical bias in the context of an inquiry into people’s willingness to pay to avoid canola oil produced from genetically modified plants. The analysis suggests the presence of groupwise hypothetical bias in these choice data.     

Managing the energy trilemma of reliability,affordability and renewables: Assessing consumer demands with discrete choice experiments

In response to the looming climate crisis, many countries are adopting technologies to reduce the accumulation of greenhouse gases. However, national energy policies are often multiobjective and resolution deeply divisive. The result is a policy trilemma between the energy mix and the trade-offs with other policy objectives, including cost and reliability. Utilising a discrete choice experiment (DCE), the objective of this study is to explore Australian household preferences for alternative electricity contracts containing features reflecting changes in future energy policy. The first set of features include investments in renewable generation and community-based energy storage. The second set of features reflect demand-side management policies, including installing smart meters and consumption limits being imposed on households during peak demand. Two versions of the DCE were developed to obtain both willingness to pay and willingness to accept estimates for the same features. In line with the literature, differences in the two sets of estimates were observed, with the willingness to accept estimates being statistically larger for some features. These dollar value measures can be used to support public policy decision-making – the choice of which depending on the context of the policy problem being considered.