IDEAS home Printed from https://ideas.repec.org/p/sss/wpaper/2016-09.html
   My bibliography  Save this paper

What is the Causal Impact of Knowledge on Preferences in Stated Preference Studies?

Author

Listed:
  • Nick Hanley

    (Department of Geography and Sustainable Development, University of St. Andrews)

  • Mikolaj Czajkowski

    (University of Warsaw, Department of Economic Sciences, Poland)

Abstract

This paper reports the results of a stated preference experiment designed to test for how information provided in a survey affects knowledge, and how knowledge affects preferences for a public good. A novel experimental design allows us to elicit subjects’ ex ante knowledge levels about a good’s attributes, exogenously vary how much new objective information about these attributes we provide to subjects, elicit subjects’ valuation for the good, and elicit posterior knowledge states about the same attributes. We find evidence of incomplete learning and fatigue: as subjects are told more information, their marginal learning rates decrease. We find there is no marginal impact of knowledge on the mean nor the variance of WTP for changes in the environmental good; but that ex ante knowledge does affect stated WTP. Our results are consistent with preference formation models of confirmation bias, costly search, or timing differences in learning and preference formation. Our results raise questions about the purpose and effects of providing information in stated preference studies

Suggested Citation

  • Nick Hanley & Mikolaj Czajkowski, 2016. "What is the Causal Impact of Knowledge on Preferences in Stated Preference Studies?," Discussion Papers in Environment and Development Economics 2016-09, University of St. Andrews, School of Geography and Sustainable Development.
    • Handle: RePEc:sss:wpaper:2016-09
    as

    Download full text from publisher

    File URL: http://www.st-andrews.ac.uk/media/dept-of-geography-and-sustainable-development/pdf-s/DP%202016-09%20Nick%20Hanley%20%20&%20Czajkowski.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Joshua Schwartzstein, 2014. "Selective Attention And Learning," Journal of the European Economic Association, European Economic Association, vol. 12(6), pages 1423-1452, December.
    2. Christie, Mike & Gibbons, James, 2011. "The effect of individual ‘ability to choose’ (scale heterogeneity) on the valuation of environmental goods," Ecological Economics, Elsevier, vol. 70(12), pages 2250-2257.
    3. Christian A. Vossler & Maurice Doyon & Daniel Rondeau, 2012. "Truth in Consequentiality: Theory and Field Evidence on Discrete Choice Experiments," American Economic Journal: Microeconomics, American Economic Association, vol. 4(4), pages 145-171, November.
    4. Roland Bénabou & Jean Tirole, 2011. "Identity, Morals, and Taboos: Beliefs as Assets," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 126(2), pages 805-855.
    5. Grossman, Zachary & Owens, David, 2012. "An unlucky feeling: Overconfidence and noisy feedback," Journal of Economic Behavior & Organization, Elsevier, vol. 84(2), pages 510-524.
    6. David Aadland & Arthur Caplan & Owen Phillips, 2007. "A Bayesian examination of information and uncertainty in contingent valuation," Journal of Risk and Uncertainty, Springer, vol. 35(2), pages 149-178, October.
    7. Kfir Eliaz & Ran Spiegler, 2011. "Consideration Sets and Competitive Marketing," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 78(1), pages 235-262.
    8. Xavier Gabaix & David Laibson & Guillermo Moloche & Stephen Weinberg, 2006. "Costly Information Acquisition: Experimental Analysis of a Boundedly Rational Model," American Economic Review, American Economic Association, vol. 96(4), pages 1043-1068, September.
    9. Yan Chen & F. Maxwell Harper & Joseph Konstan & Sherry Xin Li, 2010. "Social Comparisons and Contributions to Online Communities: A Field Experiment on MovieLens," American Economic Review, American Economic Association, vol. 100(4), pages 1358-1398, September.
    10. Rothschild, Michael, 1974. "A two-armed bandit theory of market pricing," Journal of Economic Theory, Elsevier, vol. 9(2), pages 185-202, October.
    11. Hoehn, John P. & Lupi, Frank & Kaplowitz, Michael D., 2010. "Stated Choice Experiments with Complex Ecosystem Changes: The Effect of Information Formats on Estimated Variances and Choice Parameters," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 35(3), pages 1-23, December.
    12. Bateman, Ian J. & Burgess, Diane & Hutchinson, W. George & Matthews, David I., 2008. "Learning design contingent valuation (LDCV): NOAA guidelines, preference learning and coherent arbitrariness," Journal of Environmental Economics and Management, Elsevier, vol. 55(2), pages 127-141, March.
    13. Thomas Blake & Chris Nosko & Steven Tadelis, 2015. "Consumer Heterogeneity and Paid Search Effectiveness: A Large‐Scale Field Experiment," Econometrica, Econometric Society, vol. 83, pages 155-174, January.
    14. Allcott, Hunt, 2011. "Social norms and energy conservation," Journal of Public Economics, Elsevier, vol. 95(9-10), pages 1082-1095, October.
    15. Gary Bolton & Ben Greiner & Axel Ockenfels, 2013. "Engineering Trust: Reciprocity in the Production of Reputation Information," Management Science, INFORMS, vol. 59(2), pages 265-285, January.
    16. Babur De Los Santos & Ali Hortacsu & Matthijs R. Wildenbeest, 2012. "Testing Models of Consumer Search Using Data on Web Browsing and Purchasing Behavior," American Economic Review, American Economic Association, vol. 102(6), pages 2955-2980, October.
    17. Richard G. Newell & Juha Siikamäki, 2014. "Nudging Energy Efficiency Behavior: The Role of Information Labels," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 1(4), pages 555-598.
    18. Mikolaj Czajkowski & Nick Hanley & Jacob LaRiviere, 2015. "The Effects of Experience on Preferences: Theory and Empirics for Environmental Public Goods," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 97(1), pages 333-351.
    19. 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.
    20. Paul J. Ferraro & Michael K. Price, 2013. "Using Nonpecuniary Strategies to Influence Behavior: Evidence from a Large-Scale Field Experiment," The Review of Economics and Statistics, MIT Press, vol. 95(1), pages 64-73, March.
    21. Brown, Thomas C. & Kingsley, David & Peterson, George L. & Flores, Nicholas E. & Clarke, Andrea & Birjulin, Andrej, 2008. "Reliability of individual valuations of public and private goods: Choice consistency, response time, and preference refinement," Journal of Public Economics, Elsevier, vol. 92(7), pages 1595-1606, July.
    22. Richard T. Carson & Theodore Groves & John A. List, 2014. "Consequentiality: A Theoretical and Experimental Exploration of a Single Binary Choice," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 1(1), pages 171-207.
    23. Andrew Caplin & Mark Dean, 2015. "Revealed Preference, Rational Inattention, and Costly Information Acquisition," American Economic Review, American Economic Association, vol. 105(7), pages 2183-2203, July.
    24. Andrew Caplin & Mark Dean & Daniel Martin, 2011. "Search and Satisficing," American Economic Review, American Economic Association, vol. 101(7), pages 2899-2922, December.
    25. MacMillan, Douglas & Hanley, Nick & Lienhoop, Nele, 2006. "Contingent valuation: Environmental polling or preference engine?," Ecological Economics, Elsevier, vol. 60(1), pages 299-307, November.
    26. LaRiviere, Jacob & Czajkowski, Mikołaj & Hanley, Nick & Aanesen, Margrethe & Falk-Petersen, Jannike & Tinch, Dugald, 2014. "The value of familiarity: Effects of knowledge and objective signals on willingness to pay for a public good," Journal of Environmental Economics and Management, Elsevier, vol. 68(2), pages 376-389.
    27. David Eil & Justin M. Rao, 2011. "The Good News-Bad News Effect: Asymmetric Processing of Objective Information about Yourself," American Economic Journal: Microeconomics, American Economic Association, vol. 3(2), pages 114-138, May.
    28. Vossler, Christian A. & Evans, Mary F., 2009. "Bridging the gap between the field and the lab: Environmental goods, policy maker input, and consequentiality," Journal of Environmental Economics and Management, Elsevier, vol. 58(3), pages 338-345, November.
    29. Czajkowski, Mikołaj & Hanley, Nick & LaRiviere, Jacob, 2013. "The effects of experience on preference uncertainty: theory and empirics for environmental goods," 2013 Conference (57th), February 5-8, 2013, Sydney, Australia 152155, Australian Agricultural and Resource Economics Society.
    30. Daniel A. Ackerberg, 2003. "Advertising, learning, and consumer choice in experience good markets: an empirical examination," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 44(3), pages 1007-1040, August.
    31. Rema Hanna & Sendhil Mullainathan & Joshua Schwartzstein, 2014. "Learning Through Noticing: Theory and Evidence from a Field Experiment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 129(3), pages 1311-1353.
    32. LaRiviere, Jacob & Czajkowski, Mikolaj & Hanley, Nick & Aanesen, Margrethe & Falk-Peterson, Jannike & Tinch, Dugald, 2014. "Effects of Experience, Knowledge and Signals on Willingness to Pay for a Public Good," SIRE Discussion Papers 2014-008, Scottish Institute for Research in Economics (SIRE).
    33. Krinsky, Itzhak & Robb, A Leslie, 1986. "On Approximating the Statistical Properties of Elasticities," The Review of Economics and Statistics, MIT Press, vol. 68(4), pages 715-719, November.
    34. Bolton, Gary E. & Ockenfels, Axel, 2012. "Behavioral economic engineering," Journal of Economic Psychology, Elsevier, vol. 33(3), pages 665-676.
    35. Sims, Christopher A., 2003. "Implications of rational inattention," Journal of Monetary Economics, Elsevier, vol. 50(3), pages 665-690, April.
    36. Allcott, Hunt, 2011. "Social norms and energy conservation," Journal of Public Economics, Elsevier, vol. 95(9), pages 1082-1095.
    37. Philip M. Fernbach & Steven A. Sloman & Robert St. Louis & Julia N. Shube, 2013. "Explanation Fiends and Foes: How Mechanistic Detail Determines Understanding and Preference," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 39(5), pages 1115-1131.
    38. Matthew Rabin & Joel L. Schrag, 1999. "First Impressions Matter: A Model of Confirmatory Bias," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(1), pages 37-82.
    39. Yan Chen & Sherry Xin Li, 2009. "Group Identity and Social Preferences," American Economic Review, American Economic Association, vol. 99(1), pages 431-457, March.
    40. Randall A. Lewis & Justin M. Rao, 2015. "The Unfavorable Economics of Measuring the Returns to Advertising," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 130(4), pages 1941-1973.
    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. Jacob LaRiviere & Mikolaj Czajkowski & Nick Hanley & Katherine Simpson, 2015. "What is the Causal Effect of Knowledge on Preferences?," Discussion Papers in Environment and Development Economics 2015-09, University of St. Andrews, School of Geography and Sustainable Development.
    2. Needham, Katherine & Czajkowski, Mikołaj & Hanley, Nick & LaRiviere, Jacob, 2018. "What is the causal impact of information and knowledge in stated preference studies?," Resource and Energy Economics, Elsevier, vol. 54(C), pages 69-89.
    3. Czajkowski, Mikolaj & Hanley, Nicholas & LaRiviere, Jacob & Simpson, Katherine, 2014. "What is the Causal Effect of Information and Learning about a Public Good on Willingness to Pay?," Stirling Economics Discussion Papers 2014-05, University of Stirling, Division of Economics.
    4. Czajkowski, Mikolaj & Hanley, Nicholas & Nyborg, Karine, 2014. "Social norms, morals and self-interest as determinants of pro-environment behaviour," Stirling Economics Discussion Papers 2014-06, University of Stirling, Division of Economics.
    5. Nick Hanley & Mikołaj Czajkowski, 2017. "Stated Preference valuation methods: an evolving tool for understanding choices and informing policy," Working Papers 2017-01, Faculty of Economic Sciences, University of Warsaw.
    6. LaRiviere, Jacob & Czajkowski, Mikołaj & Hanley, Nick & Aanesen, Margrethe & Falk-Petersen, Jannike & Tinch, Dugald, 2014. "The value of familiarity: Effects of knowledge and objective signals on willingness to pay for a public good," Journal of Environmental Economics and Management, Elsevier, vol. 68(2), pages 376-389.
    7. 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.
    8. Mikołaj Czajkowski & Nick Hanley & Jacob LaRiviere & William S. Neilson & Katherine Simpson, 2016. "Information and Learning in Stated-Preference Studies," Working Papers 2016-20, Faculty of Economic Sciences, University of Warsaw.
    9. Mikołaj Czajkowski & Nick Hanley & Jacob LaRiviere, 2016. "Controlling for the Effects of Information in a Public Goods Discrete Choice Model," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 63(3), pages 523-544, March.
    10. repec:sss:wpaper:201404 is not listed on IDEAS
    11. Holladay, Scott & LaRiviere, Jacob & Novgorodsky, David & Price, Michael, 2019. "Prices versus nudges: What matters for search versus purchase of energy investments?," Journal of Public Economics, Elsevier, vol. 172(C), pages 151-173.
    12. Andersson, Henrik & Ouvrard, Benjamin, 2023. "Priming and the value of a statistical life: A cross country comparison," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 104(C).
    13. Andersson, Henrik & Ouvrard, Benjamin, 2023. "Priming and the Value of a Statistical Life: A Cross Country Comparison," TSE Working Papers 23-1439, Toulouse School of Economics (TSE).
    14. Sandorf, Erlend Dancke & Aanesen, Margrethe & Navrud, Ståle, 2016. "Valuing unfamiliar and complex environmental goods: A comparison of valuation workshops and internet panel surveys with videos," Ecological Economics, Elsevier, vol. 129(C), pages 50-61.
    15. Shr, Yau-Huo (Jimmy) & Zhang, Wendong, 2024. "Omitted downstream attributes and the benefits of nutrient reductions: Implications for choice experiments," Ecological Economics, Elsevier, vol. 222(C).
    16. Ouvrard, Benjamin & Abildtrup, Jens & Stenger, Anne, 2020. "Nudging Acceptability for Wood Ash Recycling in Forests: A Choice Experiment," Ecological Economics, Elsevier, vol. 177(C).
    17. Uddin, Main & Wang, Liang Choon & Smyth, Russell, 2021. "Do government-initiated energy comparison sites encourage consumer search and lower prices? Evidence from an online randomized controlled experiment in Australia," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 167-182.
    18. Mikołaj Czajkowski & Anna Bartczak & Wiktor Budziński & Marek Giergiczny, 2014. "Within- and between- sample tests of preference stability and willingness to pay for forest management," Working Papers 2014-24, Faculty of Economic Sciences, University of Warsaw.
    19. repec:sss:wpaper:201406 is not listed on IDEAS
    20. West, Grant H. & Snell, Heather & Kovacs, Kent & Nayga, Rodolfo M., 2020. "Estimation of the preferences for the intertemporal services from groundwater," 2020 Annual Meeting, July 26-28, Kansas City, Missouri 304220, Agricultural and Applied Economics Association.
    21. Xavier Gabaix, 2017. "Behavioral Inattention," NBER Working Papers 24096, National Bureau of Economic Research, Inc.
    22. Dardanoni, Valentino & Guerriero, Carla, 2021. "Young people' s willingness to pay for environmental protection," Ecological Economics, Elsevier, vol. 179(C).

    More about this item

    Keywords

    Learning; Information; Behavioral Economics; Decision Making Under Uncertainty;
    All these keywords.

    JEL classification:

    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:sss:wpaper:2016-09. 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: Laure Kuhfuss (email available below). General contact details of provider: https://edirc.repec.org/data/eestauk.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.