Lyssenko, Nikita and Martinez-Espineira, Roberto (2009): `Been there done that': Disentangling option value effects from user heterogeneity when valuing natural resources with a use component.
Download (248kB) | Preview
Endogeneity bias arises in contingent valuation studies when the error term in the willingness to pay (WTP) equation is correlated with explanatory variables because observable and unobservable characteristics of the respondents affect both their WTP and the value of those variables. We correct for the endogeneity of variables that capture previous experience with the resource valued, humpback whales, and with the area of study. We consider several endogenous behavioral variables, so we apply a multivariate probit approach to jointly model them with WTP. In this case, correcting for endogeneity increases econometric efficiency and substantially corrects the bias affecting the estimated coefficients of the experience variables, by isolating the decreasing effect on option value caused by having experienced the resource. Stark differences are unveiled between the marginal effects on willingness to pay of experience of the resources in an alternative location versus experience in the location studied.
|Item Type:||MPRA Paper|
|Original Title:||`Been there done that': Disentangling option value effects from user heterogeneity when valuing natural resources with a use component.|
|Keywords:||contingent valuation; respondent experience; option values; multivari-ate probit; endogeneity; whales|
|Subjects:||Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics
Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q51 - Valuation of Environmental Effects
|Depositing User:||Roberto Martinez-Espineira|
|Date Deposited:||12. Apr 2010 02:05|
|Last Modified:||20. Feb 2013 08:29|
Ajzen, I., T. C. Brown, and L. H. Rosenthal: 1996, `Information Bias in Contingent Valuation: Effects of Personal Relevance, Quality of Information, and Motivational Orientation'. Journal of Environmental Economics and Management 30(1), 43-57.
Alberini, A., M. Cropper, T.-T. Fu, A. Krupnick, J.-T. Liu, D. Shaw, and W. Harrington: 1997, `Valuing Health Effects of Air Pollution in Developing Countries: The Case of Taiwan'. Journal of Environmental Economics and Management 34(2), 107-126.
Balia, S. and A. M. Jones: 2008, `Mortality, Lifestyle and Socio-Economic Status'.Journal of Health Economics 27(1), 1-26.
Benítez-Silva, H., M. Buchinsky, H. M. Chan, S. Cheidvasser, and J. Rust: 2004, `How Large is the Bias in Self-Reported Disability?'. Journal of Applied Econometrics 19(6), 649-670.
Blomquist, G. C. and J. C. Whitehead: 1998, `Resource Quality Information and Validity of Willingness to Pay in Contingent Valuation'. Resource and Energy Economics 20(2), 179-196.
Bohara, A. K., A. J. Caplan, and T. Grijalva: 2007, `The Effect of Experience and Quantity-Based Pricing on the Valuation of a Curbside Recycling Program'. Ecological Economics 64(2), 433-443.
Boyle, K. J., M. P. Welsh, and R. C. Bishop: 1993, `The Role of Question Order and Respondent Experience in Contingent-Valuation Studies'. Journal of Environmental Economics and Management 25(1), S80-S99.
Brown, T. C., P. A. Champ, R. C. Bishop, and D. W. McCollum: 1996, `Which Response Format Reveals the Truth About Donations to a Public Good?'. Land Economics 72(2), 152-166.
Buchmueller, T. C., A. Cou±nhal, M. Grignon, and M. Perronnin: 2004, `Access to Physician Services: Does Supplemental Insurance Matter? Evidence from France'. Health Economics 13(7), 669-687.
Cameron, T. A. and J. Englin: 1997, `Respondent Experience and Contingent Valuation of Environmental Goods'. Journal of Environmental Economics andManagement 33, 296-313.
Cappellari, L. and S. P. Jenkins: 2003, `Multivariate Probit Regression Using Simulated Maximum Likelihood'. The Stata Journal 3(3), 278-294.
Champ, P. and R. Bishop: 2001, `Donation Payment Mechanisms and Contingent Valuation: An Empirical Study of Hypothetical Bias'. Environmental and Resource Economics 19(4), 383-402.
Champ, P. A., R. C. Bishop, T. C. Brown, and D. W. McCollum: 1997, `Using Donation Mechanisms to Value Nonuse Benefits from Public Goods'. Journal ofEnvironmental Economics and Management 33(2), 151-162.
Contoyannis, P. and A. M. Jones: 2004, `Socio-Economic Status, Health and Lifestyle'. Journal of Health Economics 23(5), 965-995.
Cummings, R. G., D. S. Brookshire, and W. D. Schulze: 1986, Valuing Environmental Goods: An Assessment of the Contingent Valuation Method. New York: Rowman & Allanheld.
Dasgupta, S., C. Meisner, and M. Huq: 2007, `A Pinch or a Pint? Evidence of Pesticide Overuse in Bangladesh'. Journal of Agricultural Economics 58(1), 91-114.
DuWors, E., M. Villeneuve, F. L. Filion, R. Reid, P. Bouchard, D. Legg, P. Boxall, T. Williamson, A. Bath, and S. Meis: 1999, `The Importance of Nature to Canadians: Survey Highlights'. Technical report, Environment Canada.
Fairlie, R. W.: 2005, `The Effects of Home Computers on School Enrollment'. Economics of Education Review 24(5), 533-547.
Fosgerau, M. and T. B. Bj¿rner: 2006, `Joint Models for Noise Annoyance and Willingness to Pay for Road Noise Reduction'. Transportation Research Part B: Methodological 40(2), 164-178.
Freeman III, A. M.: 1993, The Measurement of Environmental and Resource Values: Theory and Methods. Washington D.C.: Resources for the Future.
Galati, J. C., P. Royston, and J. B. Carlin: 2008, `MIM: Stata Module to Analyse and Manipulate Multiply Imputed Datasets'. Statistical Software Components S456825, Boston College Department of Economics, revised 30 Mar 2008.
Garcia, S., P. Harou, C. Montagné, and A. Stenger: 2007, `Valuing Forest Biodiversity from a National Survey in France: A Dichotomous Choice Contingent Valuation'. Document de travail 2007-08 Laboratoire d'Economie Forestiere INRA.
Garcia, S., P. Harou, C. Montagné, and A. Stenger: 2008, `Models for Sample Selection Bias in Contingent Valuation: Application to Forest Biodiversity'. Journal of Forest Economics 15(1-2), 59-78.
Greene, W. H.: 1998, `Gender Economics Courses in Liberal Arts Colleges: Further Results'. Journal of Economic Education 29(4), 291-300.
Greene, W. H.: 2003, Econometric Analysis. 5th Ed. Upper Saddle River, NJ: Prentice Hall.
Haab, T. and K. McConnell: 2002, Valuing Environmental and Natural Resources: Econometrics of Non-Market Valuation. Cheltenham, UK: Edward Elgar.
Heckman, J. J.: 1978, `Dummy Endogenous Variables in a Simultaneous Equation System'. Econometrica 46(4), 931-959.
Heckman, J. J.: 1979, `Sample Selection Bias as a Specification Error'. Econometrica: Journal of the Econometric Society 47(1), 153-162.
Hoehn, J. P. and A. Randall: 2002, `The Effect of Resource Quality Information on Resource Injury Perceptions and Contingent Values'. Resource and Energy Economics 24, 13-31.
Huguenin, J., F. Pelgrin, and A. Holly: 2009, `Estimation of Multivariate Probit Models by Exact Maximum Likelihood'. Working Papers 0902, University of Lausanne, Institute of Health Economics and Management (IEMS).
Jeanty, P. W.: 2007, `Constructing Krinsky and Robb Confidence Interval for Mean and Median WTP Using Stata'. North American Stata Users' Group Meetings 2007 8, Stata Users Group, revised 30 Aug 2007.
Kniivila, M.: 2006, `Users and Non-Users of Conservation Areas: Are There Differences in WTP, Motives and the Validity of Responses in CVM Surveys?'. Ecological Economics 59(4), 530-539.
Konishi, Y. and K. Adachi: 2009, `A General Framework for Estimating Willingness-To-Pay To Avoid Endogenous Environmental Risks'. Available at http://www.uoregon.edu/ cameron/WEAI AERE 2009/paper Konishi.pdf.
Krinsky, I. and A. L. Robb: 1986, `On Approximating the Statistical Properties of Elasticities'. The Review of Economics and Statistics 68(4), 715-719.
Krinsky, I. and A. L. Robb: 1990, `On Approximating the Statistical Properties of Elasticities: A Correction'. The Review of Economics and Statistics 72(1), 189-190.
Krutilla, J. V.: 1967, `Conservation Reconsidered'. The American Economic Review 57(4), 777-786.
Loomis, J. and D. Larson: 1994, `Total Economic Values of Increasing Gray Whale Populations: Results from a Contingent Valuation Survey of Visitors and Households'. Marine Resource Economics 9(3), 275-286.
Loomis, J. B. and D. S. White: 1996, `Economic Benefits of Rare and Endangered Species: Summary and Meta-Analysis'. Ecological Economics 18(3), 197-206.
Miranda, A. and M. Bratti: 2006, `Non-Pecuniary Returns to Higher Education: The Effect on Smoking Intensity in the UK'. Keele Economics Research Papers KERP 2006/04, Centre for Economic Research, Keele University.
Miranda, A. and S. Rabe-Hesketh: 2005, `Maximum Likelihood Estimation of Endogenous Switching And Sample Selection Models for Binary, Count, and Ordinal Variables'. Keele Economics Research Papers KERP 2005/14, Centre for Economic Research, Keele University.
Mitchell, R. C. and R. T. Carson: 1989, Using Surveys to Value Public Goods. Baltimore: Johns Hopkins University for Resources for the Future. Monfardini, C. and R. Radice: 2008, `Testing Exogeneity in the Bivariate Probit Model: A Monte Carlo Study'. Oxford Bulletin of Economics and Statistics 70(2), 271-282.
O'Higgins, N.: 1994, `YTS, Employment, and Sample Selection Bias'. Oxford Economic Papers 46, 605-628.
Pagani, L. and A. Marenzi: 2008, `The Labor Market Participation of Sandwich Generation Italian Women'. Journal of Family Economic Issues 29, 427-444.
Paradiso, M. and A. Trisorio: 2001, `The Effect of Knowledge on the Disparity Between Hypothetical and Real Willingness to Pay'. Applied Economics 33(11), 1359 -1364.
Park, T., J. Loomis, and M. Creel: 1991, `Confidence Intervals for Evaluating Benefit Estimates from Dichotomous Choice Contingent Valuation Studies'. Land Economics 67, 64-73.
Royston, P.: 2004, `Multiple Imputation of Missing Values'. Stata Journal 4(3), 227-241.
Royston, P.: 2005a, `Multiple Imputation of Missing Values: Update'. The Stata Journal 5(2), 188-201.
Royston, P.: 2005b, `Multiple Imputation of Missing Values: Update of ICE'. The Stata Journal 5(4), 527-536.
Sosa-Rubí, S. G., O. Galárraga, and J. E. Harris: 2009, `Heterogeneous Impact of the "Seguro Popular" Program on the Utilization of Obstetrical Services in Mexico, 2001-2006: A Multinomial Probit Model with a Discrete Endogenous Variable'. Journal of Health Economics 28(1), 20-34.
StataCorp: 2005, Stata Statistical Software: Release 9.1. College Station, TX: StataCorp LP.
Tisdell, C., C. Wilson, and H. S. Nantha: 2008, `Contingent Valuation as a Dynamic Process'. Journal of Socio-Economics 37(4), 1443-1458.
Train, K. E.: 2003, Discrete Choice Methods with Simulation. Cambridge: Cambridge University Press.
Turpie, J. K.: 2003, `The Existence Value of Biodiversity in South Africa: How Interest, Experience, Knowledge, Income and Perceived Level of Threat Influence Local Willingness to Pay'. Ecological Economics 46(2), 199-216.
Whitehead, J. C.: 2005, `Combining Willingness to Pay and Behavior Data with Limited Information'. Resource and Energy Economics 27(2), 143- 155.
Whitehead, J. C.: 2006, `Improving Willingness to Pay Estimates for Quality Improvements Through Joint Estimation with Quality Perceptions'. Southern Economic Journal 73(1), 100-111.
Whitehead, J. C., G. C. Blomquist, T. J. Hoban, and W. B. Clifford: 1995, `Assessing the Validity and Reliability of Contingent Values: A Comparison of on-Site Users, Off-Site Users, and Non-Users'. Journal of Environmental Economics and Management 29, 238-251.
Whitehead, J. C., P. A. Groothuis, and G. C. Bloomquist: 1993, `Testing for Non-Response and Sample Selection Bias in Contingent Valuation: Analysis of a Combination of Phone/Mail Survey'. Economics Letters 41, 215-220.
Wilde, J.: 2000, `Identification of Multiple Equation Probit Models with Endogenous Dummy Regressors'. Economics Letters 69(3), 309-312.