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Incorporating zero values in the economic valuation of environmental program benefits
Author(s) -
Reiser Benjamin,
Shechter Mordechai
Publication year - 1999
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(199901/02)10:1<87::aid-env339>3.0.co;2-q
Subject(s) - contingent valuation , willingness to pay , covariate , econometrics , valuation (finance) , zero (linguistics) , economics , actuarial science , statistics , mathematics , microeconomics , accounting , linguistics , philosophy
The contingent valuation method estimates individuals' willingness to pay (WTP) for non‐market environmental assets via preferences elicited by either open‐ended or dichotomous choice questions. Traditional analysis of such data has tended to ignore zero WTP values, or treat them in an unsatisfactory manner. Recently, spike models, which explicitly allow for and incorporate zero responses, have been suggested. The paper extends the spike model approach to allow for explanatory covariates, and shows how standard computer software can be used to carry out the computations. In addition, the paper develops estimates of mean or median willingness to pay as a function of these covariates. Copyright © 1999 John Wiley & Sons, Ltd.