Scope effects in contingent valuation : does the assumed statistical distribution of WTP matter?

Borzykowski, Nicolas (Haute école de gestion de Genève, HES-SO // Haute Ecole Spécialisée de Suisse Occidentale ; Institute of Economic Research, University of Neuchâtel, Switzerland) ; Baranzini, Andrea (Haute école de gestion de Genève, HES-SO // Haute Ecole Spécialisée de Suisse Occidentale) ; Maradan, David (Haute école de gestion de Genève, HES-SO // Haute Ecole Spécialisée de Suisse Occidentale)

Economic theory assumes that willingness to pay (WTP) increases with the quantity of the consumed good. This implies that there should be a scope effect in contingent valuation studies. However, in previous issues of Ecological Economics, several authors criticized the contingent valuation (CV) method for the absence of such effect or its inadequacy. In this paper, we contribute to this ongoing debate by proposing to systematically apply several WTP statistical distribution assumptions to test for scope effects and check its plausibility, following Whitehead’s (2016) recent recommendations. We perform this approach using data from a Swiss case study assessing the WTP for an increased surface of forest reserves. We find that both mean WTP and scope effects are sensitive to the statistical distribution assumption. Regarding plausibility, scope elasticities provide mixed result and also depend on the assumed statistical distribution of WTP. For small sample size CV studies, a non-parametric analysis, a spike model or an open-ended format can thus be better suited to reveal scope effects than the classical parametric dichotomous choice analysis. We thus recommend to systematically apply several statistical distribution assumptions of WTP to test for scope effects and their plausibility.


Keywords:
Article Type:
scientifique
Faculty:
Economie et Services
School:
HEG - Genève
Institute:
CRAG - Centre de Recherche Appliquée en Gestion
Subject(s):
Economie/gestion
Date:
2018
Pagination:
11 p.
Published in:
Ecological Economics
Numeration (vol. no.):
2018, vol. 144, pp. 319-329
DOI:
ISSN:
0921-8009
Appears in Collection:



 Record created 2017-10-09, last modified 2019-04-11

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