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11 Cards in this Set
- Front
- Back
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Describe the Stated Preferences method. |
-Economists prefer demand information revealed in actual market choices(“revealed preference”data) -However, for fundamentally nonmarket goods, indirect market methods (travel cost method, hedonic property value method) may not work -Recourse? Figure out how to ask people what tradeoffs they would make, if they needed to -So called“stated-preference”demand data -Other kinds of economists have begun to concede that important economic quantities are often not directly observable, but we need to know them to explain behavior |
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Describe Contingent Valuation(CV or CVM). |
-A survey based method used to place monetary values on environmental goods and services not bought and sold in the marketplace -A“stated preference”(SP) technique…dominated by “revealed preference”(RP) methods when RP methods are feasible. -But: SP methods are the only feasible method to measure “passiveuse” values (also called“nonuse”or“existence” values) |
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Describe the Binary (referendum) CV method. |
-Respondent offered binary choice between two alternatives A. Status quo policy B. Alternative policy at a greater cost that will be imposed some how by the government, perhaps: Increased taxes Higher prices, lower wages, lower invest. returns due to regulation User fees -Indicate“favor/not favor”alternative policy(referendum) -Stated costs are randomly assigned across respondents -Analyze votes like biologists analyze a“ dose response” function |
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Describe the Debate about CV validity. |
Technical: What economic criteria should be met by the results of a CV study? -CV studies range from good to awful (often as a function of the resources available to conduct them) -What constitutes a good study? What criteria must be met before we trust a study’s results -Can apparent anomalies be explained from a behavioral perspective? -Are they actually consistent with richer models of choice behavior? -Best practices in CV research? 25 years of study concerning what can go wrong and how to minimize potential biases and distortions…. |
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How was the CV controversy resolved? |
-National Oceanic and Atmospheric Administration (NOAA) commissioned an independent Blue Ribbon Panel to assess CV -Chaired by two Nobel Prize winners: KennethArrow, RobertSolow -Concluded that “CV studies can produce estimates reliable enough to be the starting point for a judicial or administrative determination of natural resource damages—including lost passive use value”
-Proposed guidelines (preferred methods for most reliable results): In person interviews Binary discrete choice format Careful description of the good and its available substitutes Several tests for which results should be included in reports |
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What are alternative elicitation formats (CV)? |
-Binary choice (referendum)– has best properties, but need lots – Better state of the world, but at a price (answerY/N)
-Open ended (hard with unfamiliar goods)– What is the most you would be willing to pay
-Payment card (or payment ladder)-Look at this list of values; circle highest amount willingly paid
-Multiple bounded (provides information about uncertainty)– Payment card, but rate likelihood of being willing to pay each indicated amount (definitely, probably, unsure,…)
-Conjoint choice experiments(to be considered separately) –Several alternatives at several prices, each with specified mix of attributes; which is most preferred? |
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What are things to deal within CV studies? |
Face validity–Is the choice scenario plausible; is there enough information?
Yea saying– Respondent says yes to WTP question to please the interviewer (who must care about this issue or they wouldn’t beasking)
Protest zeros, naysaying– Respondent has positive WTP for the environmental good but finds the choice scenario in the survey to be implausible, or doesn’t like the payment vehicle (i.e.taxes)
Calibration– If there is a systematic bias in WTP estimates due to the hypothetical choice context, can/should this be corrected? |
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What are typical CV survey components? |
Introductory section– general context, background information about science,etc. Detailed description of the nonmarket natural resource improvement/protection in question, so it is clear what is to be valued How the natural resource improvement/protection will be provided How the natural resource improvement/protection will be paid for A suitable value elicitation method Debriefing questions about choices made by respondent Attitudes and sociodemographic variables, to allow assessment of “constructvalidity” (demonstrate that demand differs in ways you’d expect, across different types of people) |
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What are things to worry about in all SP studies? |
-Incentive compatible if individua lperceives that their choice will affect the chance that they will actually have to pay the amount in question; disembodied hypothetical choices with no consequences are unlikely to elicit useful values
-Keyidea: “consequentiality” of a stated choice…choice has to be perceived to have some effect on decision-making (if only probabilistically), and respondent has to care about the outcomeof the decision |
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Describe Conjoint Analysis. |
-Also known as “stated choice,”or“ choice experiments” -Multiple alternatives, multiple attributes, often more than one choice scenario per person -Advantage over CV: estimate marginal values associated with many different attributes of the alternatives (like hedonic models)– If range of attributes across choice sets spans entire relevant range in possible policies, you can estimate WTP for policies that differ from the ones used to estimate the marginal utility parameters– Advantage?you are ready for changes in plans |
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Describe a Conjoint Choice. |
-Choices among more alternatives (including the statusquo), where each alternative has different levels of a list of different attributes -Most preferred alternative tells us, on average, the extent to which people are willing to tradeoff among different attributes in making their choices -Random utility models can be used with these hypothetical choices just as they are used throughout economics with real choices– Estimate implied marginal utilities associated with each attribute– Ratios of marginal utilities imply how much of one attribute is viewed as equivalent to one unit of any other attribute (e.g.how many dollars of cost are viewed equivalent to one more unit of the specified attribute of the natural resource) |
