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Combining averting behavior and contingent valuation data: an application to drinking water treatment

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  • Marcia A. Rosado
  • Maria A. Cunha-e-Sa
  • Maria M. Ducla-Soares
  • Luis C. Nunes

Abstract

This paper is an empirical application that combines averting behavior with contingent valuation data. Consistency tests are performed incorporating alternative heteroscedastic structures in the bivariate probit models by taking advantage of the different information content that characterizes each data source. We look at three covariates not yet examined in the literature when combining stated and revealed preferred data to explain the variance in the models: income, the bid in the contingent valuation questionnaire, and the distance between the bid and the averting expenditures with drinking water. The models estimated include between and within data sources heteroscedasticity. The results obtained allow the combination of the two data sources under a common preference structure.

Suggested Citation

  • Marcia A. Rosado & Maria A. Cunha-e-Sa & Maria M. Ducla-Soares & Luis C. Nunes, 2000. "Combining averting behavior and contingent valuation data: an application to drinking water treatment," Nova SBE Working Paper Series wp392, Universidade Nova de Lisboa, Nova School of Business and Economics.
    • Handle: RePEc:unl:unlfep:wp392
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    References listed on IDEAS

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    1. Joseph A. Herriges & Catherine L. Kling & Christopher D. Azevedo, 1999. "Linking Revealed and Stated Preferences to Test External Validity," Center for Agricultural and Rural Development (CARD) Publications 99-wp222, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    2. Weninger, Quinn & Herriges, Joseph A. & Kling, Catherine L. & McConnell, Kenneth & Strand, Ivar, 1999. "Joint Estimation of Contingent Valuation and Truncated Recreational Demands," Staff General Research Papers Archive 5349, Iowa State University, Department of Economics.
    3. Adamowicz W. & Louviere J. & Williams M., 1994. "Combining Revealed and Stated Preference Methods for Valuing Environmental Amenities," Journal of Environmental Economics and Management, Elsevier, vol. 26(3), pages 271-292, May.
    4. 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.
    5. Bente Halvorsen & Kjartan Sœlensminde, 1998. "Differences between Willingness-to-Pay Estimates from Open-Ended and Discrete-Choice Contingent Valuation Methods: The Effects of Heteroscedasticity," Land Economics, University of Wisconsin Press, vol. 74(2), pages 262-282.
    6. Joseph A. Herriges & Catherine L. Kling (ed.), 1999. "Valuing Recreation and the Environment," Books, Edward Elgar Publishing, number 1315.
    7. Hensher, David & Louviere, Jordan & Swait, Joffre, 1998. "Combining sources of preference data," Journal of Econometrics, Elsevier, vol. 89(1-2), pages 197-221, November.
    8. Huang, Ju-Chin & Haab, Timothy C. & Whitehead, John C., 1997. "Willingness to Pay for Quality Improvements: Should Revealed and Stated Preference Data Be Combined?," Journal of Environmental Economics and Management, Elsevier, vol. 34(3), pages 240-255, November.
    9. Swait, Joffre & Adamowicz, Wiktor L., 1996. "The Effect of Choice Environment and Task Demands on Consumer Behavior: Discriminating Between Contribution and Confusion," Staff Paper Series 24091, University of Alberta, Department of Resource Economics and Environmental Sociology.
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    More about this item

    Keywords

    Averting behavior; combination of data sets; consistency tests; contingent valuation; revealed preferred data;
    All these keywords.

    JEL classification:

    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions

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