Economic Valuation With Stated Preference Techniques

by Bateman, Ian J.; Carson, Richard T.; Day, Brett; Hanemann, Michael; Hanley, Nick; Hett, Tannis; Lee, Michael Jones

• ISBN13: 9781840649192
• ISBN10: 1840649194
• Format: Hardcover
• Copyright: 2002-11-01
• Publisher: Edward Elgar Pub

Summary

This manual offers a detailed, up-to-date explanation of how to carry out economic valuation using stated preference techniques. It is relevant for the application of these techniques to all non-market goods and services including: air and water quality; provision of public open space; health care that is not sold through private markets; risk reduction policies and investments not provided privately; provision of information as with the recorded heritage, the protection of cultural assets and so on. The resulting valuations can be used for a number of purposes including, but not limited to: demonstrating the importance of a good or service; cost-benefit analysis; setting priorities for environmental policy; design of economic instruments; green national/corporate accounting, and natural resource damage assessment.

Table of Contents

List of figures	ix
List of tables	xi
List of boxes	xiii
The authors	xv
List of acronyms	xvii
Foreword	xix
Introduction	1	(1)
Purpose of this manual	1	(1)
Justification for assigning economic values to non-market effects	2	(4)
A guide to the manual	6	(7)
PART I: CONCEPTS
The foundations of economic valuation	13	(48)
The uses of economic valuation	13	(3)
The nature of economic valuation and economic efficiency	16	(2)
Economic valuation and other values	18	(2)
Economic valuation when there are no markets	20	(2)
Economic valuation and the demand curve	22	(2)
Willingness to pay and willingness to accept	24	(4)
Total economic value and aggregation	28	(10)
Stated preferences and public participation	38	(23)
Annex 1.1 Benefits transfer and stated preference techniques	42	(10)
Annex 1.2 Use of stated preference in UK environmental policy: the case of the aggregates levy	52	(3)
Annex 1.3 Discounting	55	(6)
Commissioning a stated preference study	61	(28)
Defining the context	62	(3)
Is economic valuation necessary and credible?	65	(9)
Choosing between economic valuation techniques	74	(4)
Commissioning a valuation study: a checklist	78	(6)
A typical workplan for a stated preference study	84	(5)
PART II: STATED PREFERENCE TECHNIQUES
Population, sample and survey mode	89	(23)
Defining the target population	89	(4)
The need for and the importance of sampling	93	(1)
The sampling frame	94	(2)
Choosing the sample	96	(5)
Choosing the survey mode	101	(6)
Choosing the sample size	107	(5)
Designing a contingent valuation questionnaire	112	(61)
Useful lessons from other disciplines	113	(3)
The stages of designing a contingent valuation questionnaire	116	(35)
Pre-testing	151	(5)
The main survey	156	(17)
Annex 4.1 Writing survey questions	157	(16)
Analysis of contingent valuation data	173	(75)
Contingent valuation data sets	174	(8)
Specification of the bid function	182	(9)
Estimating mean and median WTP	191	(4)
Models for testing the validity of WTP values	195	(1)
Models for benefits transfer exercises	196	(1)
Conclusions	197	(51)
Annex 5.1 Econometric estimation of the bid function	199	(25)
Annex 5.2 Estimating mean and median WTP	224	(24)
Designing a choice modelling questionnaire	248	(29)
What is choice modelling?	249	(1)
Main choice modelling approaches	250	(8)
Common design stages	258	(11)
Advantages and disadvantages of choice modelling relative to other economic valuation techniques	269	(8)
Analysis of choice modelling data	277	(19)
Choice experiments	278	(11)
Contingent ranking	289	(1)
Contingent rating	290	(4)
Paired comparison	294	(2)
Validity and reliability	296	(47)
Preferences, values and validity	297	(1)
Responses to survey questions: some basic issues	298	(2)
Value types and their consistency with economic theory	300	(4)
Overview of the validity problem and types of validity testing	304	(1)
Content validity	305	(8)
Construct validity	313	(21)
Reliability	334	(2)
Summary of factors relevant to determining validity and reliability	336	(7)
Aggregation	343	(16)
Conditions for valid aggregation	344	(3)
Aggregation approaches	347	(12)
Reporting	359	(8)
Objectives	359	(1)
Methodology	360	(1)
Literature review	360	(1)
Population and sampling strategy	360	(1)
Questionnaire design and implementation	361	(1)
Results	362	(1)
Validity testing	363	(1)
Aggregation and implications	363	(1)
Annexes	364	(3)
PART III: FURTHER ISSUES
Combining revealed and stated preference techniques	367	(11)
Why combine revealed and stated preference techniques	367	(1)
Random utility models combining stated preference and revealed preference data	368	(1)
Contingent behaviour panel data models of price changes	369	(2)
Contingent behaviour models of environmental quality changes	371	(3)
Conclusions	374	(4)
Annex 11.1 Random utility models combining stated preference and revealed preference data	376	(2)
Cautions, caveats and future directions	378	(27)
The standard neo-classical model of preferences	378	(2)
Elicitation and response mode effects	380	(5)
The disparity between WTP and WTA	385	(7)
Scope, embedding and sequencing effects	392	(6)
`Other-regarding' issues: altruism and reciprocity	398	(4)
Conclusions	402	(3)
Bibliography	405	(29)
Glossary	434	(11)
Index	445