Kevin J. Boyle

A primer on nonmarket valuation

List of Contributors. Preface P.A. Champ, K.J. Boyle, T.C. Brown. 1. Economic Valuation: What and Why A. Myrick Freeman III. 2. Conceptual Framework for Nonmarket Valuation N.E. Flores. 3. Collecting Survey Data for Nonmarket Valuation P.A. Champ. 4. Introduction to Stated Preference Methods T.C. Brown. 5. Contingent Valuation in Practice K.J. Boyle. 6. Attribute-Based Methods T.P. Holmes, W.L. Adamowicz. 7. Multiple Good Valuation T.C. Brown, G.L. Peterson. 8. Introduction to Revealed Preference Methods K.J. Boyle. 9. The Travel Cost Model G.R. Parsons. 10. The Hedonic Method L.O. Taylor. 11. Defensive Behavior and Damage Cost Methods M. Dickie. 12. Benefit Transfer R.S. Rosenberger, J.B. Loomis. 13. Nonmarket Valuation in Action D.W McCollum. 14. Where to from Here? R.C. Bishop. Index.

Contingent Valuation in Practice

Contingent Valuation in Practice takes the reader through each of the basic steps in the design and administration of a contingent-valuation study. The text is written for the novice conducting their first study, decision makers who might want to better understand the method, and experienced researchers. Rich citations to the literature are provided to help a novice reader gain a deeper understanding of the supporting literature and to assist experienced researchers in developing the context for research to enhance contingent valuation in practice. The novice and users of value estimates can rely on the content of this chapter to understand best current practices and researchers can use the content to identify research that addresses uncertainties in the design and conduct of contingent valuation studies. Following the steps outlined in the chapter provides a basis to establish that an empirical study satisfies conditions of content validity.

Analysis of contingent valuation data with multiple bids and response options allowing respondents to express uncertainty

Abstract The NOAA Panel on Contingent Valuation advocated a “no answer” response option to dichotomous-choice payment questions, but did not give guidance as to how this additional response should be interpreted conceptually or analytically. We investigate the econometric modeling and response effects associated with multiple-bounded, polychotomous-choice payment question. We find that using multiple bids with responses to each bid can increase the efficiency of welfare estimates, but this approach is not free from bid design effects. Moreover, in our application, explicitly modeling uncertain responses can increase welfare estimates by over 100%.

Benefit transfer studies: Myths, pragmatism, and idealism

Benefit transfer has been an ongoing, practical analysis for years in legal proceedings and government policy analyses where timely benefit estimates are critically dependent on the use of existing data. Most benefit transfer studies to date have been conducted behind closed doors and have not been open to scholarly review, and no systematic research agenda has been established to determine whether benefit transfer estimates are valid for public policy analyses. In this paper we propose a systematic, conceptual foundation for conducting benefit transfer studies, and suggest a research agenda to identify conditions under which valid benefit transfer estimates can be derived. We conclude, however, that this research agenda must be accompanied by improved conduct and reporting of original valuation studies before benefit transfer can become a widely used tool in public policy analyses.

Welfare Measurements Using Contingent Valuation: A Comparison of Techniques

Three commonly used techniques of asking contingent valuation questions are compared: iterative bidding, payment cards, and dichotomous choice. The results reveal that no single contingent valuation technique is neutral in the elicitation of hicksian surplus and each technique has its strengths and weaknesses. The iterative bidding estimates contain a starting point bias, while the payment card and dichotomous choice estimates were influenced by the interviewers soliciting the contingent values. Finally, the analysis of dichotomous choice responses involves unresolved issues that warrant further investigation. On the other hand, dichotomous choice is the easiest technique to administer in a survey setting.

Out of Sight, Out of Mind? Using GIS to Incorporate Visibility in Hedonic Property Value Models

This paper uses GIS data to develop variables representing the physical extent and visibility of surrounding land use/cover features in a hedonic model of a rural/suburban residential housing market. Three equations are estimated to determine if views affect property prices and, further, if omission of visibility variables leads to omitted variable biases. To improve efficiency, first-order spatial autoregressive models are estimated. Results indicate that the visibility measures are important determinants of prices and that their exclusion may lead to incorrect conclusions regarding the significance and signs of other environmental variables. (JEL Q21)

A Comparison of Conjoint Analysis Response Formats

A split-sample design is used to evaluate the convergent validity of three response formats used in conjoint analysis experiments. We investigate whether recoding rating data to rankings and choose-one formats, and recoding ranking data to choose one, result in structural models and welfare estimates that are statistically indistinguishable from estimates based on ranking or choose-one questions. Our results indicate that convergent validity of ratings, ranks, and choose one is not established. In addition, we find that people frequently use ‘ties’ in responses to rating questions, and that the option not to choose any of the alternatives (‘opt-out’) affects some preference estimates. Copyright 2001, Oxford University Press.

Valuing Public Goods: Discrete versus Continuous Contingent-Valuation Responses

Independent applications of open-ended and dichotomous-choice formats are compared using tests of means, estimating joint likelihood functions and nonparametric tests of distributions. The null hypothesis of no difference in the open-ended and dichotomous-choice estimates of central tendency cannot be rejected for two out of three data sets, while estimated standard deviations are significantly different for all three data sets. In addition, actual dichotomous-choice means and standard deviations exceed those from comparable synthetic dichotomous-choice data sets, suggesting either open-ended questions underestimate values or dichotomous-choice bid structures may lead to systematic overestimates.

Social Desirability Bias in Contingent Valuation Surveys Administered Through In-Person Interviews

This paper presents empirical evidence of mode effects in contingent valuation surveys. We conducted an on-site, split-sample contingent valuation survey of visitors to Fort Sumter National Monument, South Carolina. All respondents were told that the survey was being conducted on behalf of the National Park Service. We find that WTP for a fort visit is approximately 23–29% higher when the survey is administered through face-to-face interviews with a ballot box rather than being self-administered by the respondent. (JEL Q26, H40)

Objective versus Subjective Measures of Water Clarity in Hedonic Property Value Models

This paper examines and compares objective, scientific measures of environmental quality with subjective measures of individuals’ perceptions obtained from survey information within the context of hedonic property value models. The specific application is to water clarity of freshwater lakes in Maine. Non-nested, J-test results indicate that the objective measure of water clarity was either preferred, or equally preferred, to the subjective measure for explaining variation in sale prices. These results are promising for hedonic applications employing scientific measures of environmental quality, however robustness of these results to other environmental amenities, and more complex environmental quality measuresare of course needed. (JEL Q25)