Munro, Alistair (2007): When is some number really better than no number? On the optimal choice between non-market valuation methods.
Download (234kB) | Preview
Decision-makers have a wide variety of competing and complementary methods for non-market valuation, but there is little formal advice on the choice of method. I offer a formal approach, using a loss function (the mean square error) to compare contingent valuation, Citizens'Jury and methods where by intention only a portion of total value is estimated, when a) preferences vary across the population and b) methods are more or less susceptible to framing effects. Illustrative simulations suggest con-ditions under which the Citizens'Jury may dominate contingent valuation when framing effects are significant.
|Item Type:||MPRA Paper|
|Original Title:||When is some number really better than no number? On the optimal choice between non-market valuation methods|
|Keywords:||contingent valuation; Citizens' Jury; optimal decisions; framing effects; cost-benefit analysis|
|Subjects:||D - Microeconomics > D6 - Welfare Economics > D61 - Allocative Efficiency ; Cost-Benefit Analysis
Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q51 - Valuation of Environmental Effects
D - Microeconomics > D0 - General > D01 - Microeconomic Behavior: Underlying Principles
|Depositing User:||Alistair Munro|
|Date Deposited:||06. Jun 2008 07:46|
|Last Modified:||30. Apr 2015 09:35|
Aldred, J.: 2005, Consumer valuation and citizen deliberation, in M. Getzner, S. Stagl and C. Spash (eds), Developing Alternatives to Valuing Nature, Edward Elgar, pp. 187�208.
Aldred, J. and Jacobs, M.: 2000, Citizens and wetlands evaluating the Ely citizens�jury, Ecological Economics 34, 217�232.
Amigues, J.-P., (Broadhead), C. B., Desaigues, B., Gauthier, C. and Keith, J. E.: 2002, The bene�ts and costs of riparian analysis habitat preserva- tion a willingness to accept/willingness to pay contingent valuation aroach, Ecological Economics 43(1), 17�31.
Ariely, D., Loewenstein, G. and Prelec, D.: 2003, Coherent arbitrariness: Stable demand curves without stable preferences, Quarterly Journal of Economics 118, 73�105.
Armour, A.: 1995, The Citizens�Jury model of public participation: a critical evaluation, in O. Renn, T. Webler and P. Widemann (eds), Fairness and Competence in Citizen Participation, Kluwer Academic Publishers, Dor- drecht.
Arndt, J. and Crane, E.: 1975, Response bias, yea-saying and the double nega- tive, Journal of Market Research 12, 218�220.
Arrow, K., Solow, R., Portney, P. R., Leamer, E. E., Radner, R. and Schuman, H.: 1993, Report of the NOAA panel on contingent valuation, Federal Register 58(10), 4602�4614.
Barnes, M.: 1999, Building a Deliberative Democracy An evaluation of two Citizens�Juries, Institute for Public Policy Research, London.
Bateman, I. J., Carson, R., Day, B., Hanemann, M., Hanley, N., Hett, T., Jones-Lee, M., Loomes, G., Mourato, S., Ozdemiroglu, E., Pearce, D. W., Sugden, R. and Swanson, T.: 2002, Economic valuation with stated prefer- ence techniques: a manual, Edward Elgar.
Bateman, I. J., Langford, I. H., Turner, R. K., Willis, K. G. and Garrod, G. D.: 1995, Elicitation and truncation e¤ects in contingent valuation studies, Ecological Economics 12(2), 161�179.
Bateman, I., Munro, A., Rhodes, B., Starmer, C. and Sugden, R.: 2006, An- choring and yea-saying with private goods: an experiment, in J. List (ed.), Using Experimental Methods in Environmental and Resource Economics, Edward A. Elgar, Cheltenham.
Bishop, R. C. and Heberlein, T. A.: 1979, Measuring values of extramarket goods: Are indirect measures biased?, American Journal of Agricultural Economics 61(5), 926�930.
Bishop, R. C. and Heberlein, T. A.: 1986, Does contingent valuation work, in R. G. Cummings, D. S. Brookshire and W. Schulze (eds), Valuing En- vironmental Goods. An Assessment of the Contingent Valuation Method, Totowa, pp. 123�147.
Bishop, R., Heberlein, T. and Kealy, M.: 1983, Hypothetical bias in contingent valuation: Results from a simulated market, Natural Resources Journal 23(3), 619�633.
Blamey, R., Smith, R. J. R. and Niemeyer, S.: 2002, Citizens�Juries and Envi- ronmental Value Assessment, Research School of Social Sciences.
Bohman, J. and Rehg, W. (eds): 1997, Deliberative Democracy: Essays on Reason and Politics, MIT Press.
Bowker, J. and Stoll, J.: 1988, Use of dichotomous choice nonmarket methods to value the whooping crane resource, American Journal of Agricultural Economics 70, 372�381.
Boyce, R. R., Brown, T. C., McClelland, G. H., Peterson, G. L. and Schulze, W. D.: 1992, An experimental examination of intrinsic values as a source of the wta-wtp disparity, The American Economic Review 82(5), 1366�1373.
Boyle, K. J.: 2003, Contingent valuation in practice, in P. A. Champ, K. J. Boyle and T. C. Brown (eds), A Primer on Non-Market Valuation, Kluwer Academic Press.
Boyle, K. J. and Bishop, R. C.: 1988a, Valuing wildlife in bene�t-cost analy- sis a case study involving endangered species, Water Resources Research 23, 943�950.
Boyle, K. J. and Bishop, R. C.: 1988b, Welfare measurements using contingent valuation: A comparison of techniques, American Journal of Agricultural Economics 70(1), 20�28.
Boyle, K. J., Johnson, F. R., McCollum, D. W., Desvouges, W. H., Dunford, R. W. and Hudson, S. P.: 1996, Valuing public goods: Discrete versus continuous contingent-valuation responses, Land Economics 72(3), 381� 396.
Brookshire, D. S. and Coursey, D. L.: 1987, Measuring the value of a public good: An empirical comparison of elicitation procedures, American Eco- nomic Review (77), 554�566.
Brookshire, D. S., Randall, A. and Stoll, J. R.: 1980, Valuing increments and decrements in natural resource service �ows, American Journal of Agricul- tural Economics 62, 478�488.
Brookshire, D., Schulze, W. and D�Arge, R.: 1982, �valuing public goods a comparison of survey and hedonic aroaches�, American Economic Review 72, 165�177.
Brown, T. C., Champ, P. ., Bishop, R. and McCollum, D. W.: 1996, Which response format reveals the truth about donations to a public goods, Land Economics 72, 152�166.
Carson, R.: 2000, Contingent valuation: a user�s guide, Environmental Science & Technology 34(8), 1413�1418.
Carson, R. T.: 1998, Valuation of tropical rainforests: philosophical and practi- cal issues in the use of contingent valuation, Ecological Economics 24, 15� 29.
Carson, R. T., Flores, N. E., Martin, K. M. and Wright, J. L.: 1996, Contingent valuation and revealed preference methodologies: Comparing the estimates for quasi-public goods, Land Economics 72(1), 80�99.
Clarke, P.: 2002, Testing the convergent validity of the contingent valuation and travel cost methods in valuing the bene�ts of health care, Health Econ 11, 117�127.
Coote, A. and Lenaghan, J.: 1997, Citizens� Juries From Theory to Practice, IPPR, London.
Crosby, N.: 1991, Citizens� Juries as a basic Democratic Reform, Je¤erson Centre, Minneapolis.
Crouch, A. and Keniston, K.: 1960, Yea-sayer and nay-sayers agreeing response set as a personal variable, Journal of Abnormal and Social Psychology 60, 151�174.
Cummings, R. G. and Harrison, G. W.: 1995, The measurement and decom- position of nonuse values: A critical review, Environmental and Resource Economics 5(3), 225�247.
Cummings, R. G., Harrison, G. W. and Rutstrom, E. E.: 1995, Homegrown values and hypothetical surveys: Is the dichotomous choice approach incentive-compatible?, The American Economic Review 85(1), 260�266.
Diamond, P. and Hausman, J. A.: 1994, Contingent valuation: Is some number better than no number?, Journal of Economic Perspectives 8, 45�64.
Fischo¤, B.: 1991, Value elicitation is there anything in there?, American Psy- chologist 468, 835�847.
Frykblom, P. and Shogren, J. F.: 2000, An experimental testing of anchoring e¤ects in discrete choice questions, Environmental and Resource Economics 16(3), 329�341.
Greenley, D., Walsh, R. G. and Young, R. A.: 1981, Option value: Empiri- cal evidence from a case study of recreation and water quality, Quarterly Journal of Economics 96(4), 657�673.
Gregory, R. S.: 2000, Valuing environmental policy options: A case study com- parison of multiattribute and contingent valuation survey methods�Land Economics and 76 151-173. 76.
Gregory, R. S. and Slovic, P.: 1997, Commentary a constructive approach to environmental valuation, Ecological Economics 21, 175�181.
Gregory, R. and Wellman, K.: 2001, Bringing stakeholder values into environ- mental policy choices: a community-based estuary case study, Ecological Economics 39(1), 37�52.
Halvorsen, B., and Soelensminde, K.: 1998, Di¤erences between willingness- to-pay estimates from open-ended and discrete-choice contingent valuation methods the e¤ects of heteroscedasticity, Land Economics 74(2), 262�282.
Hanemann, W.: 1984, Welfare evaluations in contingent valuation experi- ments with discrete responses, American Journal of Agricultural Economics 66(3), 332�341.
Herriges, J. A. and Shogren, J. F.: 1996, Starting point bias in dichotomous choice valuation with follow-up questioning, Journal Of Environmental Economics And Management 30(1), 112�131.
Hoehn, J. and Randall, A.: 1987, A satisfactory bene�t cost indicator from contingent valuation, Journal of Environmental Economic Management 14, 226�247.
Holmes, T. and Kramer, R. A.: 1995, An independent sample test of yea-saying and starting point bias in dichotomous-choice contingent valuation, Journal of Environmental Economic Management 29, 121�132.
Horowitz, J. K. and McConnell, K. E.: 2002, A review of WTA/WTP studies, Journal of Environmental Economics and Management 44(3), 426�447. Howarth, R. and Wilson, M.: 2006, A theoretical approach to deliberative val- uation: Aggregation by mutual consent, Land Economics 20(1), 1�16.
Huang, J., Haab, T. and Whitehead, J.: 1997, Willingness to pay for quality improvements: Should revealed and stated preference data be combined?, Journal of Environmental Economics and Management 34(3), 240�255.
Johannesson, M., Liljas, J. B. and O�Conor, R. M.: 1997, Hypothetical ver- sus real willingness to pay some experimental results, Applied Economics Letters 4(3), 149�159.
Kahneman, D., Slovic, P. and Tversky, A.: 1982, Judgment Under Uncertainty: Heuristics and Biases, Cambridge University Press.
Kanninen, B. J.: 1995, Bias in discrete response contingent valuation, Journal of Environmental Economics and Management 28, 114�125. 27
Kennedy, C. A.: 2002, Revealed preference valuation compared to contin- gent valuation: radon-induced lung cancer prevention, Health Economics 117, 585 �598.
Kenyon, W., Nevin, C. and Hanley, N.: 2003, Enhancing Environmental Decision-making Using Citizens Juries, Local Environment 8(2), 221�232.
Kerr, N. L., MacCoun, R. J. and Kramer, G. P.: 1996, Bias in judgment: Comparing individuals and groups, Psychological Review 1034, 687�719.
Kontoleon, A. and Swanson, T.: 2003, The willingness to pay for property rights for the giant panda: Can a charismatic species be an instrument for nature conservation?, Land Economics 79(4), 483�499.
Kristrom, B.: 1993, Comparing continuous and discrete contingent valuation questions, Environmental and Resource Economics 31, 63�71.
Lazo, J. K., McClelland, G. H. and Schulze, W. D.: 1997, Economic theory and psychology of non use values, Land Economics 73(3), 358�371.
Li, C.-Z., Löfgren, K.-G. and Hanemann, W. M.: 1996, Real versus Hypothetical Willingness to Accept The Bishop and Heberlein Model Revisited, CUDARE Working Paper 793.
List, J. A.: 2002, Preference reversals of a di¤erent kind: The "more is less" phenomenon, The American Economic Review 92(5), 1636�1643.
List, J. A.: 2003, Does market experience eliminate market anomalies?, Quar- terly Journal of Economics 118(1), 41�71.
McFadden, D.: 1999, Rationality for economists?, Journal of Risk and Uncer- tainty 19(1), 73�105.
Mitchell, R. C. and Carson, R. T.: 1989, Using Surveys to Value Public Goods: the contingent valuation method, Resources for the Future.
Orne, M.: 1962, On the social psychology of the psychological experiment, American Psychologist 17, 776�783.
Philip, L., Hanley, N., Macmillan, D. C. and Alvarez-Farizo, B.: 2002, Valu- ing the non-market bene�ts of wild goose conservation: a comparison of interview and group based approaches, Ecological Economics 43(1), 49�59.
Sago¤, M.: 1998, Aggregation and deliberation in valuing environmental public goods: A look beyond contingent pricing, Ecological Economics 24(2), 213� 230.
Sayman, S. and Onculer, A.: 2005, E¤ects of study design characteristics on the WTA-WTP disparity: A meta- analytical framework, Journal of Economic Psychology 26, 289�312.
Schkade, D. and Payne, J.: 1994, How people respond to contingent valuation questions: A verbal protocol analysis of willingness to pay for an environ- mental regulation, Journal of Environmental Economics and Management 26(1), 88�109.
Shogren, J. F., Shin, S. Y., Hayes, D. J. and Kliebenstein, J. B.: 1994, Resolving di¤erences in willingness to pay and willingness to accept, The American Economic Review 84(1), 255�270.
Silberman, J., Gerlowski, D. A. and Williams, N. A.: 1992, Estimating exis- tence value for users and nonusers of New Jersey beaches, Land Economics 68(2), 225�236.
Slovic, P. and Lichtenstein, S.: 1971, Comparison of Bayesian and regression approaches to the study of information processing in judgement, Organi- zational Behaviour and Human Performance 6, 649�744.
Smith, V., Desvousges, W. and Fisher, A.: 1986, A comparison of direct and indirect methods for estimating environmental bene�ts, American Journal of Agricultural Economics 68(2), 280�290.
Sugden, R.: 2005, Anomalies and stated preference techniques: A framework for a discussion of coping strategies, Environmental and Resource Economics 32(1), 1�12.
Thayer, M.: 1981, Contingent valuation techniques for assessing environmen- tal impacts: Further evidence., Journal of Environmental Economics and Management 8(1), 27�44.
Van Soest, A. and Hurd, M.: 2003, A Test for Anchoring and Yea-Saying in Experimental Consumption Data, RAND Corporation.
Whittington, D., Briscoe, J., Mu, X. and Barron, W.: 1990, Estimating the willingness to pay for water services in developing countries a case study of the use of contingent valuation surveys in Southern Haiti, Economic Development and Cultural Change 38(2), 293�311.
Wilson, M. and Howarth, R.: 2002, Discourse-based valuation of ecosystem services: establishing fair outcomes through group deliberation, Ecological Economics 41(3), 431�443.