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Testing for Misspecification in the Referendum Contingent Valuation Approach
Author(s) -
Ozuna Teofilo,
Jang Kee Yoon,
Stoll John R.
Publication year - 1993
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 - 10.2307/1242917
Subject(s) - referendum , heteroscedasticity , econometrics , contingent valuation , valuation (finance) , economics , willingness to pay , microeconomics , finance , politics , political science , law
Binary choice models are frequently used in the analysis of referendum contingent valuation data. Because omitted regressors, heteroskedasticity, and distribution asymmetry in these models result in inconsistent parameter estimates, it is important that misspecification tests be undertaken. In this article, conditional moment tests for these problems are presented and applied to data from two referendum contingent valuation studies. Results show that some models have misspecification problems and that these problems affect the estimation of welfare measures.