Using Labels to Investigate Scope Effects in Stated Preference Methods |
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Authors: | Miko?aj Czajkowski Nick Hanley |
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Institution: | (1) Department of Food Economics and Consumption Studies, University of Kiel, Olshausenstrasse 40, D–24098 Kiel, Germany;; |
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Abstract: | Insufficient sensitivity to scope (variations in the scale of the environmental good on offer) remains a major criticism of
stated preference methods, and many studies fail a scope test of some sort. Across a range of existing explanations for insensitivity
to scope (commodity mis-specification, embedding, warm glows) there seems to exist no clear conclusion on how to deal with
the problem. This paper provides an alternative explanation for insufficient sensitivity to scope, based on re-definition
of the determinants of value for environmental goods within an attributes-based choice model. In the proposed framework respondents’
Willingness To Pay need depend not only on physical characteristics of a good, but may also depend on the ‘label’ under which
the environmental good is ‘sold’ in the hypothetical market. To investigate this problem, a Choice Experiment study of biodiversity
was conducted. We find that controlling for the effects of a label—in this case, national park designation—leads to significant
increase in the scope sensitivity of welfare measures. |
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Keywords: | |
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