Referendum Models and Economic Values: Theoretical, Intuitive, and Practical Bounds on Willingness to Pay

Haab, Timothy C.; McConnell, Kenneth E.
May 1998
Land Economics;May98, Vol. 74 Issue 2, p216
Academic Journal
Innovations in the estimation of referendum type contingent valuation models have led to willingness-to-pay (WTP) measures inconsistent with consumer preferences and unbounded from above or below. We propose a set of criteria which guarantee a bounded measure of WTP. The criteria reject the traditional random utility model with unrestricted error terms in favor of the random WTP model with bounds on WTP. Once WTP is bounded by zero and income, the form of the distribution is less consequential. A new model for WTP is developed based on the beta distribution and is compared to previously estimated models.


Related Articles

  • Monte Carlo Benchmarks for Discrete Response Valuation Methods. Ju-Chin Huang; Smith, V. Kerry // Land Economics;May98, Vol. 74 Issue 2, p186 

    This paper argues that the belief that discrete contingent valuation (CV) questions yield substantially larger estimates of the mean (and the median] willingness to pay (WTP) for nonmarket resources in comparison to open-ended CV questions is unfounded. Monte Carlo experiments estimate the...

  • Modeling Response Incentive Effects in Dichotomous Choice Contingent Valuation Data. Alberini, Anna; Kanninen, Barbara; Carson, Richard T. // Land Economics;Aug97, Vol. 73 Issue 3, p309 

    This paper introduces model specifications that can be used to explain response incentive effects that might occur with discrete response contingent valuation data when follow-up responses are collected. The models allow for possible random response shocks, structural shifts in willingness to...

  • Economic Theory and Psychology of Non-Use Values. Lazo, Jeffrey K.; McClelland, Gary H.; Schulze, William D. // Land Economics;Aug97, Vol. 73 Issue 3, p358 

    Potential double counting across generations has led some opponents of the contingent valuation method to claim that non-use values should be eliminated from benefit estimates. This paper shows both theoretically and empirically that this conclusion is not warranted. Depending on individuals'...

  • Differences between Willingness-to-Pay Estimates from Open-Ended and Discrete-Choice Contingent Valuation Methods: The Effects of Heteroscedasticity. Halvorsen, Bente; Sœlensminde, Kjartan // Land Economics;May98, Vol. 74 Issue 2, p262 

    Most comparative studies find that the discrete-choice contingent valuation method (DC-CVM) yields higher willingness-to-pay (WTP) estimates than the open-ended (OE) format. In this paper, we discuss and test several hypotheses to explain why WTP estimates from OE and DC-CVM questions differ. We...

  • Obtaining Welfare Bounds in Discrete-Response Valuation Studies. Vaughan, William J.; Rodriguez, Diego J. // Land Economics;Aug2001, Vol. 77 Issue 3, p457 

    The article comments on the study conducted by Boman, Bostedt and Kristrom (1999) that shows how nonparametric lower bound, intermediate and upper bound measures of average welfare change can be extracted from discrete-response contingent valuation survey data. The study appears to offer a...

  • Accuracy in Valuation is a Matter of Degree. Jo Kealy, Mary; Dovidio, John F.; Rockel, Mark L. // Land Economics;May88, Vol. 64 Issue 2, p158 

    To measure the value of environmental amenities, economists have asked people to state their maximum willingness to pay for a good or service under hypothetical circumstances. Because the willingness to pay statement depends on the circumstances specified, this technique is called contingent...

  • Economic Valuation of the Environment: How Citizens Make Sense of Contingent Valuation Questions. Svedsäter, Henrik // Land Economics;Feb2003, Vol. 79 Issue 1, p122 

    This study adopts a qualitative approach in order to investigate how people make sense of contingent valuation (CV) questions of a global environmental amenity. The objective is not only to capture people's motivations and considerations of willingness to pay (WTP), but also to determine if they...

  • Local Preferences for Shea Nut and Butter Production in Northern Benin: Preliminary Results. Agúndez, Dolores; Nouhoheflin, Théodore; Coulibaly, Ousmane; Soliño, Mario; Alía, Ricardo // Forests (19994907);Jan2020, Vol. 11 Issue 1, p1 

    Shea products in Benin (West Africa) are produced in a low-developed agroindustry, but they are estimated to be the country’s third largest export. The nut harvesting and quality guaranteeing in the butter process can only be achieved through improvements in the value chain, thus making...

  • Induced-Value Tests of Contingent Valuation Elicitation Mechanisms. Vossler, Christian; McKee, Michael // Environmental & Resource Economics;Oct2006, Vol. 35 Issue 2, p137 

    Using an induced-value experimental design that varies whether values for a “good” are certain or uncertain and whether payment is real or hypothetical, this study investigates issues of demand revelation, hypothetical bias, and value uncertainty for four elicitation mechanisms used...


Read the Article


Sorry, but this item is not currently available from your library.

Try another library?
Sign out of this library

Other Topics