IDEAS home Printed from https://ideas.repec.org/a/uwp/landec/v74y1998i2p186-202.html
   My bibliography  Save this article

Monte Carlo Benchmarks for Discrete Response Valuation Methods

Author

Listed:
  • Ju-Chin Huang
  • V. Kerry Smith

Abstract

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 factors influencing the performance of WTP estimates based on discrete response models. Most of the error arises from the specification errors common to the empirical models in the literature. These experiments suggest models where WTP is dominated by nonuse (or passive use) values are likely to have smaller errors than where large use values influence these decisions.

Suggested Citation

  • Ju-Chin Huang & V. Kerry Smith, 1998. "Monte Carlo Benchmarks for Discrete Response Valuation Methods," Land Economics, University of Wisconsin Press, vol. 74(2), pages 186-202.
    • Handle: RePEc:uwp:landec:v:74:y:1998:i:2:p:186-202
    as

    Download full text from publisher

    File URL: http://www.jstor.org/stable/pdfplus/3147050
    Download Restriction: A subscripton is required to access pdf files. Pay per article is available.
    ---><---

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

    Other versions of this item:

    References listed on IDEAS

    as
    1. Kling, Catherine L., 1988. "Comparing welfare estimates of environmental quality changes from recreation demand models," Journal of Environmental Economics and Management, Elsevier, vol. 15(3), pages 331-340, September.
    2. T.A. Cameron & D.D. Huppert, 1988. ""Referendum" Contingent Valuation Estimates: Sensitivity to the Assignment of Offered Values," UCLA Economics Working Papers 519, UCLA Department of Economics.
    3. Cummings, Ronald G & Elliott, Steven & Harrison, Glenn W & Murphy, James, 1997. "Are Hypothetical Referenda Incentive Compatible?," Journal of Political Economy, University of Chicago Press, vol. 105(3), pages 609-621, June.
    4. Joseph Cooper & John Loomis, 1992. "Sensitivity of Willingness-to-Pay Estimates to Bid Design in Dichotomous Choice Contingent Valuation Models," Land Economics, University of Wisconsin Press, vol. 68(2), pages 211-224.
    5. Wiktor L. Adamowicz & Jerald J. Fletcher & Theodore Graham-Tomasi, 1989. "Functional Form and the Statistical Properties of Welfare Measures," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 71(2), pages 414-421.
    6. Cameron, Trudy Ann, 1988. "A new paradigm for valuing non-market goods using referendum data: Maximum likelihood estimation by censored logistic regression," Journal of Environmental Economics and Management, Elsevier, vol. 15(3), pages 355-379, September.
    7. Cropper, Maureen L & Deck, Leland B & McConnell, Kenneth E, 1988. "On the Choice of Functional Form for Hedonic Price Functions," The Review of Economics and Statistics, MIT Press, vol. 70(4), pages 668-675, November.
    8. Mary Jo Kealy & Robert W. Turner, 1993. "A Test of the Equality of Closed-Ended and Open-Ended Contingent Valuations," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(2), pages 321-331.
    9. Anna Alberini, 1995. "Testing Willingness-to-Pay Models of Discrete Choice Contingent Valuation Survey Data," Land Economics, University of Wisconsin Press, vol. 71(1), pages 83-95.
    10. Kevin J. Boyle & F. Reed Johnson & Daniel W. McCollum & William H. Desvousges & Richard W. Dunford & Sara P. Hudson, 1996. "Valuing Public Goods: Discrete versus Continuous Contingent-Valuation Responses," Land Economics, University of Wisconsin Press, vol. 72(3), pages 381-396.
    11. 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.
    12. 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).
    13. Richard C. Ready & Jean C. Buzby & Dayuan Hu, 1996. "Differences between Continuous and Discrete Contingent Value Estimates," Land Economics, University of Wisconsin Press, vol. 72(3), pages 397-411.
    14. Daniel McFadden, 1994. "Contingent Valuation and Social Choice," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 76(4), pages 689-708.
    15. McConnell, K. E., 1990. "Models for referendum data: The structure of discrete choice models for contingent valuation," Journal of Environmental Economics and Management, Elsevier, vol. 18(1), pages 19-34, January.
    16. Holmes Thomas P. & Kramer Randall A., 1995. "An Independent Sample Test of Yea-Saying and Starting Point Bias in Dichotomous-Choice Contingent Valuation," Journal of Environmental Economics and Management, Elsevier, vol. 29(1), pages 121-132, July.
    17. Trudy Ann Cameron, 1992. "Combining Contingent Valuation and Travel Cost Data for the Valuation of Nonmarket Goods," Land Economics, University of Wisconsin Press, vol. 68(3), pages 302-317.
    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. Daniel Mccollum & Kevin Boyle, 2005. "The Effect of Respondent Experience/Knowledge in the Elicitation of Contingent Values: An Investigation of Convergent Validity, Procedural Invariance and Reliability," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 30(1), pages 23-33, January.
    2. Dominika Dziegielewska & Robert Mendelsohn, 2007. "Does “No” mean “No”? A protest methodology," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 38(1), pages 71-87, September.
    3. Dixie Reaves & Randall Kramer & Thomas Holmes, 1999. "Does Question Format Matter? Valuing an Endangered Species," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 14(3), pages 365-383, October.
    4. Richard C. Ready & Ståle Navrud & RW. Richard Dubourg, 2001. "How Do Respondents with Uncertain Willingness to Pay Answer Contingent Valuation Questions?," Land Economics, University of Wisconsin Press, vol. 77(3), pages 315-326.
    5. Carson, Richard T & Flores, Nicholas A, 2000. "Contingent Valuation: Controversies and Evidence," University of California at San Diego, Economics Working Paper Series qt75k752s7, Department of Economics, UC San Diego.
    6. Herring, Matthew W. & Garnett, Stephen T. & Zander, Kerstin K., 2022. "Producing rice while conserving the habitat of an endangered waterbird: Incentives for farmers to integrate water management," Land Use Policy, Elsevier, vol. 120(C).
    7. Soliño, Mario & Prada, Albino & Vázquez, María X., 2010. "Designing a forest-energy policy to reduce forest fires in Galicia (Spain): A contingent valuation application," Journal of Forest Economics, Elsevier, vol. 16(3), pages 217-233, August.
    8. Poe, Gregory L. & Vossler, Christian A., 2001. "Does Specification Error Explain the Discrepancy Between Open-Ended and Dichotomous Choice Contigent Valuation Responses? A Comment on "Monte Carlo Benchmarks for Discrete Valuation Methods"," Working Papers 127665, Cornell University, Department of Applied Economics and Management.
    9. Cameron, Trudy Ann & Poe, Gregory L. & Ethier, Robert G. & Schulze, William D., 2002. "Alternative Non-market Value-Elicitation Methods: Are the Underlying Preferences the Same?," Journal of Environmental Economics and Management, Elsevier, vol. 44(3), pages 391-425, November.
    10. Raymond Y. T. Yeung & Richard D. Smith & Lai‐Ming Ho & Janice M. Johnston & Gabriel M. Leung, 2006. "Empirical implications of response acquiescence in discrete‐choice contingent valuation," Health Economics, John Wiley & Sons, Ltd., vol. 15(10), pages 1077-1089, October.
    11. 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.

    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. 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.
    2. Ryan, Mandy & Scott, David A. & Donaldson, Cam, 2004. "Valuing health care using willingness to pay: a comparison of the payment card and dichotomous choice methods," Journal of Health Economics, Elsevier, vol. 23(2), pages 237-258, March.
    3. Richard T. Carson, 2011. "Contingent Valuation," Books, Edward Elgar Publishing, number 2489.
    4. 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.
    5. Smith, V. Kerry & Mansfield, Carol, 1998. "Buying Time: Real and Hypothetical Offers," Journal of Environmental Economics and Management, Elsevier, vol. 36(3), pages 209-224, November.
    6. Bohara, Alok K. & McKee, Michael & Berrens, Robert P. & Jenkins-Smith, Hank & Silva, Carol L. & Brookshire, David S., 1998. "Effects of Total Cost and Group-Size Information on Willingness to Pay Responses: Open Ended vs. Dichotomous Choice," Journal of Environmental Economics and Management, Elsevier, vol. 35(2), pages 142-163, March.
    7. 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.
    8. Carlevaro, Fabrizio & Schlesser, C. & Binet , M. E. & Paul, M., 2007. "Econometric Modeling and Analysis of Residential Water Demand Based on Unbalanced Panel Data," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 8(4), pages 81-102.
    9. Kai-Lih Chen, 1999. "Measuring values of wetlands in Taiwan," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 2(1), pages 65-89, March.
    10. Welsh, Michael P. & Poe, Gregory L., 1998. "Elicitation Effects in Contingent Valuation: Comparisons to a Multiple Bounded Discrete Choice Approach," Journal of Environmental Economics and Management, Elsevier, vol. 36(2), pages 170-185, September.
    11. 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.
    12. Kai-Lih Chen, 1999. "Measuring values of wetlands in Taiwan," Environmental Economics and Policy Studies, Springer;Society for Environmental Economics and Policy Studies - SEEPS, vol. 2(1), pages 65-89, March.
    13. Talwar, Shagorika, 1995. "An evaluation of statistical efficiency and bias trade-off involved with the use of follow-up questioning in the contingent valuation of environmental amenities," ISU General Staff Papers 1995010108000018160, Iowa State University, Department of Economics.
    14. Ryan, Mandy & San Miguel, Fernando, 2000. "Testing for consistency in willingness to pay experiments," Journal of Economic Psychology, Elsevier, vol. 21(3), pages 305-317, June.
    15. Cameron, Trudy Ann & Poe, Gregory L. & Ethier, Robert G. & Schulze, William D., 2002. "Alternative Non-market Value-Elicitation Methods: Are the Underlying Preferences the Same?," Journal of Environmental Economics and Management, Elsevier, vol. 44(3), pages 391-425, November.
    16. Pere Riera & Raúl Brey & Guillermo Gándara, 2008. "Bid design for non-parametric contingent valuation with a single bounded dichotomous choice format," Hacienda Pública Española / Review of Public Economics, IEF, vol. 186(3), pages 43-60, October.
    17. 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.
    18. Rong-Chang Jou & Yuan-Chan Wu & Ke-Hong Chen, 2011. "Analysis of the environmental benefits of a motorcycle idling stop policy at urban intersections," Transportation, Springer, vol. 38(6), pages 1017-1033, November.
    19. Watson, Verity & Ryan, Mandy, 2007. "Exploring preference anomalies in double bounded contingent valuation," Journal of Health Economics, Elsevier, vol. 26(3), pages 463-482, May.
    20. Mandy Ryan & Verity Watson, 2009. "Comparing welfare estimates from payment card contingent valuation and discrete choice experiments," Health Economics, John Wiley & Sons, Ltd., vol. 18(4), pages 389-401, April.

    More about this item

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • Q2 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation

    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:uwp:landec:v:74:y:1998:i:2:p:186-202. 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: the person in charge (email available below). General contact details of provider: http://le.uwpress.org/ .

    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.