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Relating environmental attitudes and contingent values: how robust are methods for identifying preference heterogeneity?

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  • Gwendolyn Aldrich
  • Kristine Grimsrud
  • Jennifer Thacher
  • Matthew Kotchen

Abstract

We assess the importance and robustness of cluster analysis and latent class analysis as methods to account for unobserved heterogeneity. We provide a critique and comparison of both methods in the context of measuring environmental attitudes and a contingent valuation study involving endangered species. We find strong evidence of robustness for these methods: group characterization and assignment of individuals to groups are similar between methods, and willingness-to-pay estimates are consistent. In addition, there are significant differences in willingness-to-pay across environmental attitudinal groups, and we find that accounting for unobservable heterogeneity provides a significantly better fitting model. Copyright Springer Science+Business Media, Inc. 2007

Suggested Citation

  • Gwendolyn Aldrich & Kristine Grimsrud & Jennifer Thacher & Matthew Kotchen, 2007. "Relating environmental attitudes and contingent values: how robust are methods for identifying preference heterogeneity?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 37(4), pages 757-775, August.
    • Handle: RePEc:kap:enreec:v:37:y:2007:i:4:p:757-775
    DOI: 10.1007/s10640-006-9054-7
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