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CE and CV
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Ladenburg and Olsen, 2008
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In this paper, we test whether preferences and willingness-to-pay estimates obtained in a Choice Experiment study are susceptible to starting point bias as is often the case in Dichotomous Choice Contingent Valuation studies. On the basis of a multinomial probit model, we find that preferences are indeed susceptible to starting point bias. In a split-sample design our results suggest that varying the price levels displayed in a so-called Instructional Choice Set presented prior to the actual preference eliciting choice sets, significantly impacts respondents’ preferences and willingness-to-pay for protecting Danish nature areas from new motorway development. In particular, our results show that the bias is gender-specific. Only female respondents are significantly affected. Results further reveal that the impact of the starting point bias decays as respondents evaluate more and more choice sets. This supports the Discovered Preference Hypothesis, and on the basis of this we suggest a number of ways to potentially mitigate the starting point bias.
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Hensher et al., 2005
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Water consumption and disposal are often taken for granted as essential services
with required levels of service quality, yet little is known about how much consumers are
willing to pay for specific service levels. As customers in many countries face changing levels of
water availability (especially shortages linked possibly to climate change and limited catch-
ment capacity), the need to assess the value (and hence benefit) to society of varying service
levels and prices in an effort to secure the provision of and disposal of water has risen on
public agendas. In an attempt to establish how much customers are willing to pay for specific
levels of service, we use a series of stated choice experiments and mixed logit models to
establish the willingness to pay to avoid interruptions in water service and overflows of
wastewater, differentiated by the frequency, timing and duration of these events. The empirical
evidence is an important input into the regulatory process for establishing service levels and
tariffs, as well as useful planning information for agencies charged with finding cost effective
ways of delivering services at prices that customers deem to be value for money.
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CV vs CE
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Loomis et al., 2000
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Five ecosystem services that could be restored along a 45-mile section of the Platte river were described to
respondents using a building block approach developed by an interdisciplinary team. These ecosystem services were
dilution of wastewater, natural purification of water, erosion control, habitat for fish and wildlife, and recreation.
Households were asked a dichotomous choice willingness to pay question regarding purchasing the increase in
ecosystem services through a higher water bill. Results from nearly 100 in-person interviews indicate that households
would pay an average of $21 per month or $252 annually for the additional ecosystem services. Generalizing this to
the households living along the river yields a value of $19 million to $70 million depending on whether those refusing
to be interviewed have a zero value or not. Even the lower bound benefit estimates exceed the high estimate of water
leasing costs ($1.13 million) and conservation reserve program farmland easements costs ($12.3 million) necessary to
produce the increase in ecosystem services.
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Kotchen and Reiling (2000)
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AdamowiczEtAl1998.pdf
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CameronEtAl2002.pdf
