IDEAS home Printed from https://ideas.repec.org/a/taf/jenpmg/v59y2016i2p342-359.html
   My bibliography  Save this article

Willingness to pay towards a public good: how does a refund option affect stated values?

Author

Listed:
  • Stephen O'Neill
  • Lava Prakash Yadav

Abstract

Mandatory taxes and/or voluntary contributions are commonly adopted as the payment vehicle when eliciting willingness to pay (WTP) in environmental valuation studies. While mandatory taxes may arouse negative feelings, voluntary contributions may lead to strategic behaviour (over bidding) or free riding (under bidding). In this paper, we explore an alternative payment vehicle which avoids the draconian undertones associated with taxes and may be more incentive compatible than a voluntary contribution - a tax that incorporates a refund option. The template for such a payment vehicle is the value added tax charged to tourists in Ireland, but which can be reclaimed on exiting the country. In the context of raising public funds to support the conservation of rural countryside landscape, a comparison is made between the elicited WTP via a mandatory tax and that elicited via the alternative payment method incorporating a refund option. While we observe similar participation rates between the two payment methods, the refund option reveals a higher stated WTP.

Suggested Citation

  • Stephen O'Neill & Lava Prakash Yadav, 2016. "Willingness to pay towards a public good: how does a refund option affect stated values?," Journal of Environmental Planning and Management, Taylor & Francis Journals, vol. 59(2), pages 342-359, February.
    • Handle: RePEc:taf:jenpmg:v:59:y:2016:i:2:p:342-359
    DOI: 10.1080/09640568.2015.1010683
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/09640568.2015.1010683
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/09640568.2015.1010683?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Milon, J. Walter, 1989. "Contingent valuation experiments for strategic behavior," Journal of Environmental Economics and Management, Elsevier, vol. 17(3), pages 293-308, November.
    2. Murat Isik, 2006. "An experimental analysis of impacts of uncertainty and irreversibility on willingness-to-pay," Applied Economics Letters, Taylor & Francis Journals, vol. 13(2), pages 67-72.
    3. Loomis, John & Ekstrand, Earl, 1998. "Alternative approaches for incorporating respondent uncertainty when estimating willingness to pay: the case of the Mexican spotted owl," Ecological Economics, Elsevier, vol. 27(1), pages 29-41, October.
    4. John A. List & David Lucking-Reiley, 2002. "The Effects of Seed Money and Refunds on Charitable Giving: Experimental Evidence from a University Capital Campaign," Journal of Political Economy, University of Chicago Press, vol. 110(1), pages 215-233, February.
    5. Carl Bonham & Byron Gangnes, 1995. "Intervention Analysis with Cointegrated Time Series: The Case of the Hawaii Hotel Room Tax," Working Papers 199505, University of Hawaii at Manoa, Department of Economics.
    6. Franz Hackl & Martin Halla & Gerald J. Pruckner, 2007. "Local compensation payments for agri-environmental externalities: a panel data analysis of bargaining outcomes," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 34(3), pages 295-320, September.
    7. Nikita Lyssenko & Roberto Mart󹑺-Espiñeira, 2012. "Respondent uncertainty in contingent valuation: the case of whale conservation in Newfoundland and Labrador," Applied Economics, Taylor & Francis Journals, vol. 44(15), pages 1911-1930, May.
    8. Richard T. Carson, 1997. "Contingent Valuation: Theoretical Advances and Empirical Tests Since the NOAA Panel," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(5), pages 1501-1507.
    9. Stephen Hynes & Danny Campbell & Peter Howley, 2011. "A Holistic vs. an Attribute‐based Approach to Agri‐Environmental Policy Valuation: Do Welfare Estimates Differ?," Journal of Agricultural Economics, Wiley Blackwell, vol. 62(2), pages 305-329, June.
    10. Li Chuan-Zhong & Mattsson Leif, 1995. "Discrete Choice under Preference Uncertainty: An Improved Structural Model for Contingent Valuation," Journal of Environmental Economics and Management, Elsevier, vol. 28(2), pages 256-269, March.
    11. Robert G. Ethier & Gregory L. Poe & William D. Schulze & Jeremy Clark, 2000. "Comparison of Hypothetical Phone and Mail Contingent Valuation Responses for Green-Pricing Electricity Programs," Land Economics, University of Wisconsin Press, vol. 76(1), pages 54-67.
    12. Thomas H. Stevens & Jaime Echeverria & Ronald J. Glass & Tim Hager & Thomas A. More, 1991. "Measuring the Existence Value of Wildlife: What Do CVM Estimates Really Show?," Land Economics, University of Wisconsin Press, vol. 67(4), pages 390-400.
    13. Wiser, Ryan H., 2007. "Using contingent valuation to explore willingness to pay for renewable energy: A comparison of collective and voluntary payment vehicles," Ecological Economics, Elsevier, vol. 62(3-4), pages 419-432, May.
    14. Eckel, Catherine C. & Grossman, Philip J., 2003. "Rebate versus matching: does how we subsidize charitable contributions matter?," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 681-701, March.
    15. Ajzen, Icek & Brown, Thomas C. & Rosenthal, Lori H., 1996. "Information Bias in Contingent Valuation: Effects of Personal Relevance, Quality of Information, and Motivational Orientation," Journal of Environmental Economics and Management, Elsevier, vol. 30(1), pages 43-57, January.
    16. 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.
    17. Champ, Patricia A. & Bishop, Richard C. & Brown, Thomas C. & McCollum, Daniel W., 1997. "Using Donation Mechanisms to Value Nonuse Benefits from Public Goods," Journal of Environmental Economics and Management, Elsevier, vol. 33(2), pages 151-162, June.
    18. Catherine C. Eckel & Philip J. Grossman, 2006. "Subsidizing Charitable Giving with Rebates or Matching: Further Laboratory Evidence," Southern Economic Journal, John Wiley & Sons, vol. 72(4), pages 794-807, April.
    19. G. Philpotts, 1975. "The private allocation of public funds," Public Choice, Springer, vol. 23(1), pages 25-34, September.
    20. Baranzini, Andrea & Faust, Anne-Kathrin & Huberman, David, 2010. "Tropical forest conservation: Attitudes and preferences," Forest Policy and Economics, Elsevier, vol. 12(5), pages 370-376, June.
    21. Catherine Eckel & Philip Grossman, 2008. "Subsidizing charitable contributions: a natural field experiment comparing matching and rebate subsidies," Experimental Economics, Springer;Economic Science Association, vol. 11(3), pages 234-252, September.
    22. Patricia A. Champ & Nicholas E. Flores & Thomas C. Brown & PJames Chivers, 2002. "Contingent Valuation and Incentives," Land Economics, University of Wisconsin Press, vol. 78(4), pages 591-604.
    23. Bienabe, Estelle & Hearne, Robert R., 2006. "Public preferences for biodiversity conservation and scenic beauty within a framework of environmental services payments," Forest Policy and Economics, Elsevier, vol. 9(4), pages 335-348, December.
    24. Shaikh, Sabina L. & Sun, Lili & Cornelis van Kooten, G., 2007. "Treating respondent uncertainty in contingent valuation: A comparison of empirical treatments," Ecological Economics, Elsevier, vol. 62(1), pages 115-125, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Halkos, George E & Aslanidis, Panagiotis-Stavros & Landis, Conrad & Papadaki, Lydia & Koundouri, Phoebe, 2024. "A review on primary and cascading hazards by exploring individuals’ willingness-to-pay for urban sustainability policies," MPRA Paper 122262, University Library of Munich, Germany.
    2. Gordillo, Fernando & Elsasser, Peter & Günter, Sven, 2019. "Willingness to pay for forest conservation in Ecuador: Results from a nationwide contingent valuation survey in a combined “referendum” – “Consequential open-ended” design," Forest Policy and Economics, Elsevier, vol. 105(C), pages 28-39.

    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. Lyssenko, Nikita & Martinez-Espineira, Roberto, 2009. "`Been there done that': Disentangling option value effects from user heterogeneity when valuing natural resources with a use component," MPRA Paper 21976, University Library of Munich, Germany, revised 08 Apr 2010.
    2. Wiser, Ryan H., 2007. "Using contingent valuation to explore willingness to pay for renewable energy: A comparison of collective and voluntary payment vehicles," Ecological Economics, Elsevier, vol. 62(3-4), pages 419-432, May.
    3. Voltaire, Louinord & Pirrone, Claudio & Bailly, Denis, 2013. "Dealing with preference uncertainty in contingent willingness to pay for a nature protection program: A new approach," Ecological Economics, Elsevier, vol. 88(C), pages 76-85.
    4. Carola Braun & Katrin Rehdanz & Ulrich Schmidt, 2016. "Validity of Willingness to Pay Measures under Preference Uncertainty," PLOS ONE, Public Library of Science, vol. 11(4), pages 1-17, April.
    5. Akcura, Elcin, 2015. "Mandatory versus voluntary payment for green electricity," Ecological Economics, Elsevier, vol. 116(C), pages 84-94.
    6. Baranzini, Andrea & Faust, Anne-Kathrin & Huberman, David, 2010. "Tropical forest conservation: Attitudes and preferences," Forest Policy and Economics, Elsevier, vol. 12(5), pages 370-376, June.
    7. Elcin Akcura, 2013. "Mandatory versus voluntary payment for green electricity," Working Papers 161, European Bank for Reconstruction and Development, Office of the Chief Economist.
    8. Suziana Hassan & Søren Bøye Olsen & Bo Jellesmark Thorsen, 2018. "Appropriate Payment Vehicles in Stated Preference Studies in Developing Economies," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 71(4), pages 1053-1075, December.
    9. Habib, Khandker Nurul, 2017. "Improving choice model parameter estimates by jointly modelling the SP choices with corresponding elicited certainty ratings," Transportation Research Part A: Policy and Practice, Elsevier, vol. 95(C), pages 305-319.
    10. Ana Bobinac, 2019. "Mitigating hypothetical bias in willingness to pay studies: post-estimation uncertainty and anchoring on irrelevant information," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 20(1), pages 75-82, February.
    11. Li, Hui & Jenkins-Smith, Hank C. & Silva, Carol L. & Berrens, Robert P. & Herron, Kerry G., 2009. "Public support for reducing US reliance on fossil fuels: Investigating household willingness-to-pay for energy research and development," Ecological Economics, Elsevier, vol. 68(3), pages 731-742, January.
    12. Deck, Cary & Murphy, James J., 2019. "Donors change both their level and pattern of giving in response to contests among charities," European Economic Review, Elsevier, vol. 112(C), pages 91-106.
    13. 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.
    14. Adena, Maja, 2021. "How can we improve tax incentives for charitable giving? Lessons from field experiments in fundraising," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, pages 344-353.
    15. Uggeldahl, Kennet & Jacobsen, Catrine & Lundhede, Thomas Hedemark & Olsen, Søren Bøye, 2016. "Choice certainty in Discrete Choice Experiments: Will eye tracking provide useful measures?," Journal of choice modelling, Elsevier, vol. 20(C), pages 35-48.
    16. Moore, Rebecca & Bishop, Richard C. & Provencher, Bill & Champ, Patricia A., 2009. "Accounting for Respondent Uncertainty to Improve Willingness-to-Pay Estimates," Staff Papers 92233, University of Wisconsin-Madison, Department of Agricultural and Applied Economics.
    17. Nikita Lyssenko & Roberto Mart󹑺-Espiñeira, 2012. "Respondent uncertainty in contingent valuation: the case of whale conservation in Newfoundland and Labrador," Applied Economics, Taylor & Francis Journals, vol. 44(15), pages 1911-1930, May.
    18. Phil Shackley & Simon Dixon, 2014. "The Random Card Sort Method And Respondent Certainty In Contingent Valuation: An Exploratory Investigation Of Range Bias," Health Economics, John Wiley & Sons, Ltd., vol. 23(10), pages 1213-1223, October.
    19. Kelvin Balcombe & Iain Fraser, 2009. "Dichotomous-choice contingent valuation with 'dont know' responses and misreporting," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 24(7), pages 1137-1152.
    20. Hermann Donfouet & Pierre-Alexandre Mahieu & Eric Malin, 2013. "Using respondents’ uncertainty scores to mitigate hypothetical bias in community-based health insurance studies," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 14(2), pages 277-285, April.

    More about this item

    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:taf:jenpmg:v:59:y:2016:i:2:p:342-359. 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: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/CJEP20 .

    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.