IDEAS home Printed from https://ideas.repec.org/a/aea/jecper/v8y1994i4p19-43.html
   My bibliography  Save this article

Valuing the Environment through Contingent Valuation

Author

Listed:
  • W. Michael Hanemann

Abstract

Contingent valuation is now used around the world to value many types of public goods, including transportation, sanitation, health, and education, as well as the environment. The author describes how researchers go about making such surveys reliable, mentioning recent innovations in sampling, questionnaire design, and data analysis, including formulating the valuation as a closed-ended question about voting in a referendum to raise taxes for a particular purpose. He addresses various objections that contingent valuation results are incompatible with economic theory. Even without a market, there still exists a latent demand curve for nonmarket goods; contingent valuation represents a way to tease this out.

Suggested Citation

  • W. Michael Hanemann, 1994. "Valuing the Environment through Contingent Valuation," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 19-43, Fall.
    • Handle: RePEc:aea:jecper:v:8:y:1994:i:4:p:19-43
    Note: DOI: 10.1257/jep.8.4.19
    as

    Download full text from publisher

    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.8.4.19
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Juster, F Thomas & Stafford, Frank P, 1991. "The Allocation of Time: Empirical Findings, Behavioral Models, and Problems of Measurement," Journal of Economic Literature, American Economic Association, vol. 29(2), pages 471-522, June.
    2. Bohm, Peter, 1972. "Estimating demand for public goods: An experiment," European Economic Review, Elsevier, vol. 3(2), pages 111-130.
    3. Madden, Paul, 1991. "A Generalization of Hicksian q Substitutes and Complements with Application to Demand Rationing," Econometrica, Econometric Society, vol. 59(5), pages 1497-1508, September.
    4. Per-Olov Johansson, 1992. "Altruism in cost-benefit analysis," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 2(6), pages 605-613, November.
    5. F. Thomas Juster, 1964. "Anticipations and Purchases: An Analysis of Consumer Behavior," NBER Books, National Bureau of Economic Research, Inc, number just64-1.
    6. Richard T. Carson & Nicholas E. Flores & Kerry M. Martin & Jennifer L. Wright, 1996. "Contingent Valuation and Revealed Preference Methodologies: Comparing the Estimates for Quasi-Public Goods," Land Economics, University of Wisconsin Press, vol. 72(1), pages 80-99.
    7. Kelley, Stanley & Mirer, Thad W., 1974. "The Simple Act of Voting," American Political Science Review, Cambridge University Press, vol. 68(2), pages 572-591, June.
    8. Michael Hanemann & John Loomis & Barbara Kanninen, 1991. "Statistical Efficiency of Double-Bounded Dichotomous Choice Contingent Valuation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 73(4), pages 1255-1263.
    9. Kalle Seip & Jon Strand, 1992. "Willingness to pay for environmental goods in Norway: A contingent valuation study with real payment," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 2(1), pages 91-106, January.
    10. William J. Infosino, 1986. "Forecasting New Product Sales from Likelihood of Purchase Ratings," Marketing Science, INFORMS, vol. 5(4), pages 372-384.
    11. Hoehn, John P & Randall, Alan, 1989. "Too Many Proposals Pass the Benefit Cost Test," American Economic Review, American Economic Association, vol. 79(3), pages 544-551, June.
    12. Mathiowetz, Nancy A & Duncan, Greg J, 1988. "Out of Work, Out of Mind: Response Errors in Retrospective Reports of Unemployment," Journal of Business & Economic Statistics, American Statistical Association, vol. 6(2), pages 221-229, April.
    13. Clotfelter, Charles T., 1985. "Federal Tax Policy and Charitable Giving," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226110486.
    14. Olshavsky, Richard W & Granbois, Donald H, 1979. "Consumer Decision Making-Fact or Fiction?," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 6(2), pages 93-100, Se.
    15. Alan Randall, 1994. "Difficulty with the Travel Cost Method," Land Economics, University of Wisconsin Press, vol. 70(1), pages 88-96.
    16. Jones-Lee, M W & Hammerton, M & Philips, P R, 1985. "The Value of Safety: Results of a National Sample Survey," Economic Journal, Royal Economic Society, vol. 95(377), pages 49-72, March.
    17. Sinden, Jack A., 1988. "Empirical Tests Of Hypothetical Bias In Consumers' Surplus Surveys," Australian Journal of Agricultural Economics, Australian Agricultural and Resource Economics Society, vol. 32(2-3), pages 1-15, August.
    18. Richard T. Carson, 2011. "Contingent Valuation," Books, Edward Elgar Publishing, number 2489.
    19. W. Michael Hanemann, 1984. "Welfare Evaluations in Contingent Valuation Experiments with Discrete Responses," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 66(3), pages 332-341.
    20. Barbara J. Kanninen, 1993. "Optimal Experimental Design for Double-Bounded Dichotomous Choice Contingent Valuation," Land Economics, University of Wisconsin Press, vol. 69(2), pages 138-146.
    21. Carson, R.T. & Mitchell, R.C. & Hanemann, W.M. & Kopp, R.J. & Presser, S. & Ruud, P.A., 1992. "A Contingent Valuation Study of Lost Passive Use Values Resulting From the Exxon Valdez Oil Spill," MPRA Paper 6984, University Library of Munich, Germany.
    22. Becker, Gary S, 1993. "Nobel Lecture: The Economic Way of Looking at Behavior," Journal of Political Economy, University of Chicago Press, vol. 101(3), pages 385-409, June.
    23. Randall, Alan & Ives, Berry & Eastman, Clyde, 1974. "Bidding games for valuation of aesthetic environmental improvements," Journal of Environmental Economics and Management, Elsevier, vol. 1(2), pages 132-149, August.
    24. Bishop, Richard C. & Heberlein, Thomas A., 1979. "Measuring Values Of Extramarket Goods: Are Indirect Measures Biased?," 1979 Annual Meeting, July 29-August 1, Pullman, Washington 277818, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    25. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    26. Harrison, Glenn W., 1992. "Valuing public goods with the contingent valuation method: A critique of kahneman and knetsch," Journal of Environmental Economics and Management, Elsevier, vol. 23(3), pages 248-257, November.
    27. Frisch, Deborah, 1993. "Reasons for Framing Effects," Organizational Behavior and Human Decision Processes, Elsevier, vol. 54(3), pages 399-429, April.
    28. repec:cdl:agrebk:315195 is not listed on IDEAS
    29. John W. Pratt & David A. Wise & Richard Zeckhauser, 1979. "Price Differences in almost Competitive Markets," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 93(2), pages 189-211.
    30. Peter Bohm, 1972. "Estimating the demand for public goods: An experiment," Framed Field Experiments 00126, The Field Experiments Website.
    31. Helen R. Neill & Ronald G. Cummings & Philip T. Ganderton & Glenn W. Harrison & Thomas McGuckin, 1994. "Hypothetical Surveys and Real Economic Commitments," Land Economics, University of Wisconsin Press, vol. 70(2), pages 145-154.
    32. Cutler, David M & Elmendorf, Douglas W & Zeckhauser, Richard J, 1993. "Demographic Characteristics and the Public Bundle," Public Finance = Finances publiques, , vol. 48(Supplemen), pages 178-198.
    33. Kahneman, Daniel & Knetsch, Jack L., 1992. "Valuing public goods: The purchase of moral satisfaction," Journal of Environmental Economics and Management, Elsevier, vol. 22(1), pages 57-70, January.
    34. Bettman, James R & Zins, Michel A, 1977. "Constructive Processes in Consumer Choice," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 4(2), pages 75-85, Se.
    35. Smith, V. Kerry, 1992. "Arbitrary values, good causes, and premature verdicts," Journal of Environmental Economics and Management, Elsevier, vol. 22(1), pages 71-89, January.
    36. Bengt Kristrom & Pere Riera, 1996. "Is the income elasticity of environmental improvements less than one?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 7(1), pages 45-55, January.
    37. Briscoe, John, et al, 1990. "Toward Equitable and Sustainable Rural Water Supplies: A Contingent Valuation Study in Brazil," The World Bank Economic Review, World Bank, vol. 4(2), pages 115-134, May.
    38. Adamowicz W. & Louviere J. & Williams M., 1994. "Combining Revealed and Stated Preference Methods for Valuing Environmental Amenities," Journal of Environmental Economics and Management, Elsevier, vol. 26(3), pages 271-292, May.
    39. S. V. Ciriacy-Wantrup, 1947. "Capital Returns from Soil-Conservation Practices," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 29(4_Part_II), pages 1181-1196.
    40. Charles T. Clotfelter, 1985. "Federal Tax Policy and Charitable Giving," NBER Books, National Bureau of Economic Research, Inc, number clot85-1.
    41. Richard C. Bishop & Thomas A. Heberlein, 1979. "Measuring Values of Extramarket Goods: Are Indirect Measures Biased?," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 61(5), pages 926-930.
    42. Smith, V. Kerry & Osborne, Laura L., 1996. "Do Contingent Valuation Estimates Pass a "Scope" Test? A Meta-analysis," Journal of Environmental Economics and Management, Elsevier, vol. 31(3), pages 287-301, November.
    43. Brookshire, David S, et al, 1982. "Valuing Public Goods: A Comparison of Survey and Hedonic Approaches," American Economic Review, American Economic Association, vol. 72(1), pages 165-177, March.
    44. Boyle Kevin J. & Welsh Michael P. & Bishop Richard C., 1993. "The Role of Question Order and Respondent Experience in Contingent-Valuation Studies," Journal of Environmental Economics and Management, Elsevier, vol. 25(1), pages 80-99, July.
    45. Atsushi Maki & Shigeru Nishiyama, 1993. "Consistency Between Macro‐ And Micro‐Data Sets In The Japanese Household Sector," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 39(2), pages 195-207, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Richard T. Carson, 2011. "Contingent Valuation," Books, Edward Elgar Publishing, number 2489.
    2. Richard T. Carson & Miko_aj Czajkowski, 2014. "The discrete choice experiment approach to environmental contingent valuation," Chapters, in: Stephane Hess & Andrew Daly (ed.), Handbook of Choice Modelling, chapter 9, pages 202-235, Edward Elgar Publishing.
    3. Veisten, Knut, 2007. "Contingent valuation controversies: Philosophic debates about economic theory," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 36(2), pages 204-232, April.
    4. Richard Carson & Nicholas Flores & Norman Meade, 2001. "Contingent Valuation: Controversies and Evidence," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 19(2), pages 173-210, June.
    5. Richard Carson & Theodore Groves, 2007. "Incentive and informational properties of preference questions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(1), pages 181-210, May.
    6. Robert J. Johnston & Kevin J. Boyle & Wiktor (Vic) Adamowicz & Jeff Bennett & Roy Brouwer & Trudy Ann Cameron & W. Michael Hanemann & Nick Hanley & Mandy Ryan & Riccardo Scarpa & Roger Tourangeau & Ch, 2017. "Contemporary Guidance for Stated Preference Studies," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 4(2), pages 319-405.
    7. James Murphy & P. Allen & Thomas Stevens & Darryl Weatherhead, 2005. "A Meta-analysis of Hypothetical Bias in Stated Preference Valuation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 30(3), pages 313-325, March.
    8. Cropper, Maureen L & Oates, Wallace E, 1992. "Environmental Economics: A Survey," Journal of Economic Literature, American Economic Association, vol. 30(2), pages 675-740, June.
    9. Banzhaf, H. Spencer, 2016. "Constructing markets: environmental economics and the contingent valuation controversy," MPRA Paper 78814, University Library of Munich, Germany.
    10. Smith, V. Kerry, 2000. "JEEM and Non-market Valuation: 1974-1998," Journal of Environmental Economics and Management, Elsevier, vol. 39(3), pages 351-374, May.
    11. Langford, Ian H. & Bateman, Ian J., 1996. "Elicitation and truncation effects in contingent valuation studies," Ecological Economics, Elsevier, vol. 19(3), pages 265-267, December.
    12. John K. Horowitz & Kenneth E. McConnell & James J. Murphy, 2013. "Behavioral foundations of environmental economics and valuation," Chapters, in: John A. List & Michael K. Price (ed.), Handbook on Experimental Economics and the Environment, chapter 4, pages 115-156, Edward Elgar Publishing.
    13. Shogren, Jason F., 2006. "Experimental Methods and Valuation," Handbook of Environmental Economics, in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 2, chapter 19, pages 969-1027, Elsevier.
    14. Vivien Foster & Ian J. Bateman & David Harley, 1998. "Real and hypothetical willingness to pay for environmental preservation: a non-experimental comparison," Chapters, in: Melinda Acutt & Pamela Mason (ed.), Environmental Valuation, Economic Policy and Sustainability, chapter 3, pages 35-50, Edward Elgar Publishing.
    15. Richard O‘Conor & Magnus Johannesson & Per-Olov Johansson, 1999. "Stated Preferences, Real Behaviour and Anchoring: Some Empirical Evidence," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 13(2), pages 235-248, March.
    16. Vivien Foster & Susana Mourato, 2003. "Elicitation Format and Sensitivity to Scope," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 24(2), pages 141-160, February.
    17. Carina Cavalcanti & Andreas Leibbrandt, 2017. "A glance into the willingness to reduce overfishing: Field evidence from a fishnet exchange program," Monash Economics Working Papers 09-17, Monash University, Department of Economics.
    18. List, John A. & Shogren, Jason F., 2002. "Calibration of Willingness-to-Accept," Journal of Environmental Economics and Management, Elsevier, vol. 43(2), pages 219-233, March.
    19. Murphy, James J. & Stevens, Thomas H., 2004. "Contingent Valuation, Hypothetical Bias, and Experimental Economics," Agricultural and Resource Economics Review, Cambridge University Press, vol. 33(2), pages 182-192, October.
    20. Hanemann, W. Michael & Kanninen, Barbara, 1996. "The Statistical Analysis Of Discrete-Response Cv Data," CUDARE Working Papers 25022, University of California, Berkeley, Department of Agricultural and Resource Economics.

    More about this item

    JEL classification:

    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources
    • A10 - General Economics and Teaching - - General Economics - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:aea:jecper:v:8:y:1994:i:4:p:19-43. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Michael P. Albert (email available below). General contact details of provider: https://edirc.repec.org/data/aeaaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.