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Valuing publicly sponsored research projects: Risks, scenario adjustments, and inattention

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  • Daniel Burghart
  • Trudy Cameron
  • Geoffrey Gerdes

Abstract

Survey-based choice scenarios used to value non-market public goods typically preclude any risk that the benefits described may not be delivered. Our survey specifies explicit risks of (a) outright program failure and (b) program redundancy due to possible private sector substitutes. Additionally, most analyses assume that survey subjects fully accept these scenarios and that all provided information receives their complete attention. Our discounted expected utility model of choice accommodates both these objective risks and the possibility of subjective scenario adjustment or selective inattention by respondents. We then counterfactually simulate willingness-to-pay in the absence of these distortions. Copyright Springer Science+Business Media, LLC 2007

Suggested Citation

  • Daniel Burghart & Trudy Cameron & Geoffrey Gerdes, 2007. "Valuing publicly sponsored research projects: Risks, scenario adjustments, and inattention," Journal of Risk and Uncertainty, Springer, vol. 35(1), pages 77-105, August.
    • Handle: RePEc:kap:jrisku:v:35:y:2007:i:1:p:77-105
    DOI: 10.1007/s11166-007-9018-5
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    Cited by:

    1. David Laibson, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(2), pages 443-478.
    2. B. Douglas Bernheim & Antonio Rangel, 2009. "Beyond Revealed Preference: Choice-Theoretic Foundations for Behavioral Welfare Economics," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 124(1), pages 51-104.
    3. Davies, Helen J. & Wu, Hangjian & Schaafsma, Marije, 2023. "Willingness-to-pay for urban ecosystem services provision under objective and subjective uncertainty," Resource and Energy Economics, Elsevier, vol. 71(C).
    4. Klaus Glenk & Sergio Colombo, 2013. "Modelling outcome-related risk in choice experiments," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 57(4), pages 559-578, October.
    5. Henrik Serup Christensen & Lauri Rapeli, 2021. "Immediate rewards or delayed gratification? A conjoint survey experiment of the public’s policy preferences," Policy Sciences, Springer;Society of Policy Sciences, vol. 54(1), pages 63-94, March.
    6. Naald, Brian Vander & Cameron, Trudy Ann, 2011. "Willingness to pay for other species' well-being," Ecological Economics, Elsevier, vol. 70(7), pages 1325-1335, May.
    7. Wen Lin & David L Ortega & Vincenzina Caputo, 2023. "Experimental quantity, mental budgeting and food choice: a discrete choice experiment application," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 50(2), pages 457-496.
    8. Canales, Elizabeth & Bergtold, Jason S. & Williams, Jeffery & Peterson, Jeffrey, 2015. "Estimating farmers’ risk attitudes and risk premiums for the adoption of conservation practices under different contractual arrangements: A stated choice experiment," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205640, Agricultural and Applied Economics Association.
    9. John Rolfe & Jill Windle, 2015. "Do Respondents Adjust Their Expected Utility in the Presence of an Outcome Certainty Attribute in a Choice Experiment?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 60(1), pages 125-142, January.
    10. Xie, Bai-Chen & Zhao, Wei, 2018. "Willingness to pay for green electricity in Tianjin, China: Based on the contingent valuation method," Energy Policy, Elsevier, vol. 114(C), pages 98-107.
    11. Cerroni, Simone & Notaro, Sandra & Raffaelli, Roberta & Shaw, Douglass W., 2013. "The incorporation of subjective risks into choice experiments to test scenario adjustment," 2013 Second Congress, June 6-7, 2013, Parma, Italy 149894, Italian Association of Agricultural and Applied Economics (AIEAA).
    12. Xuemin Liu & Jiaoju Ge & Ting Ren, 2021. "Uncertainty and Tourism Consumption Preferences: Evidence from the Representative Chinese City of Shenzhen," Sustainability, MDPI, vol. 13(8), pages 1-20, April.
    13. Zawojska Ewa, 2017. "A Consequential Contingent Valuation Referendum: Still Not Enough to Elicit True Preferences for Public Goods!," Central European Economic Journal, Sciendo, vol. 2(49), pages 73-90, December.
    14. Provencher, Bill & Lewis, David J. & Anderson, Kathryn, 2012. "Disentangling preferences and expectations in stated preference analysis with respondent uncertainty: The case of invasive species prevention," Journal of Environmental Economics and Management, Elsevier, vol. 64(2), pages 169-182.
    15. 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.
    16. Jaeseung Lee & Trudy Cameron, 2008. "Popular Support for Climate Change Mitigation: Evidence from a General Population Mail Survey," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 41(2), pages 223-248, October.
    17. Beilei Cai & Trudy Cameron & Geoffrey Gerdes, 2010. "Distributional Preferences and the Incidence of Costs and Benefits in Climate Change Policy," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 46(4), pages 429-458, August.
    18. Bond, Craig A. & Iverson, Terrence, 2011. "Modeling Information in Environmental Decision-Making," Western Economics Forum, Western Agricultural Economics Association, vol. 10(2), pages 1-17.
    19. Yohei Mitani & Nicholas Flores, 2014. "Hypothetical Bias Reconsidered: Payment and Provision Uncertainties in a Threshold Provision Mechanism," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 59(3), pages 433-454, November.
    20. Glenk, Klaus & Fischer, Anke, 2010. "Insurance, prevention or just wait and see? Public preferences for water management strategies in the context of climate change," Ecological Economics, Elsevier, vol. 69(11), pages 2279-2291, September.
    21. Wang, Hua & He, Jie & Huang, Desheng, 2020. "Public distrust and valuation biases: Identification and calibration with contingent valuation studies of two air quality improvement programs in China," China Economic Review, Elsevier, vol. 61(C).
    22. Marsh, Dan & Mkwara, Lena Asimenye & Scarpa, Riccardo, 2010. "Does respondent’s perceived knowledge of the status quo affect attribute attendance and WTP in choice experiments? Evidence from the Karapiro Catchment Freshwater streams," 2010 Conference, August 26-27, 2010, Nelson, New Zealand 96809, New Zealand Agricultural and Resource Economics Society.
    23. Azlina, A. A. & Abu Bakar, Shahida & Kamaludin, Mahirah & Ghani, Awang Noor, 2022. "Willingness to Pay for Renewable Energy: Evidence From High Wind and Wave Energy Potential Areas," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 56(1), pages 59-70.

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    More about this item

    Keywords

    Failure risk; Redundancy risk; Scenario adjustment; Inattention; Stated preferences; Willingness to pay; R&D benefits; H4; Q26; D6; C25; Q25; Q48;
    All these keywords.

    JEL classification:

    • H4 - Public Economics - - Publicly Provided Goods
    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources
    • D6 - Microeconomics - - Welfare Economics
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • Q25 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Water
    • Q48 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Government Policy

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