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Statistical Efficiency of Double‐Bounded Dichotomous Choice Contingent Valuation
Author(s) -
Hanemann Michael,
Loomis John,
Kanninen Barbara
Publication year - 1991
Publication title -
american journal of agricultural economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.949
H-Index - 111
eISSN - 1467-8276
pISSN - 0002-9092
DOI - 10.2307/1242453
Subject(s) - contingent valuation , respondent , bounded function , economics , econometrics , mathematics , valuation (finance) , san joaquin , willingness to pay , statistics , microeconomics , environmental science , mathematical analysis , finance , political science , soil science , law
The statistical efficiency of conventional dichotomous choice contingent valuation surveys can be improved by asking each respondent a second dichotomous choice question which depends on the response to the first question—if the first response is “yes,” the second bid is some amount greater than the first bid; while, if the first response is “no,” the second bid is some amount smaller. This “double‐bounded” approach is shown to be asymptotically more efficient than the conventional, “singlebounded” approach. Using data from a survey of Californians regarding their willingness to pay for wetlands in the San Joaquin Valley, we show that, in a finite sample, the gain in efficiency can be very substantial.