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Robust Contingent Values Based on Dichotomous Choice Survey Data
Author(s) -
Bassett Gilbert W.,
JenkinsSmith Hank C.,
Silva Carol L.
Publication year - 1997
Publication title -
environmetrics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.68
H-Index - 58
eISSN - 1099-095X
pISSN - 1180-4009
DOI - 10.1002/(sici)1099-095x(199709/10)8:5<387::aid-env259>3.0.co;2-f
Subject(s) - referendum , econometrics , context (archaeology) , reservation , population , economics , robustness (evolution) , willingness to pay , statistics , mathematics , geography , microeconomics , demography , political science , politics , sociology , law , biochemistry , chemistry , archaeology , gene
Estimated willingness‐to‐pay (WTP) is considered in the context of dichotomous choice referendum surveys. The sensitivity or robustness of estimates is investigated when some members of the population do not respond consistent with how they would vote in a real referendum. The majority of responses are presumed to be consistent with reservation prices. However, some are yea sayers and respond favourably for virtually and bid amount, and some are nay sayers reporting that they would vote ‘no’ even at very low bid values. The yea and nay saying leads to response curves with theoretically anomalous, but empirically important features: there are too many ‘no’ votes at low bid amounts, and too many ‘yes’ votes at high bid values. Impacts of yea and nay saying on mean WTP are in opposite directions, but magnitudes are not equal, so that it is possible for observed WTP to be large even if reservation prices in the population are small. It is conjectured that this is a plausible explanation for the CV folklore in which there is a $30 lower bound on the CV for practically any environmental good. © 1997 John Wiley & Sons, Ltd.