Sensitivity of Willingness to Pay Estimates to the Level of Attributes in Discrete Choice Experiments

2000 ◽  
Vol 47 (5) ◽  
pp. 504-524 ◽  
Author(s):  
Mandy Ryan ◽  
Sarah Wordsworth
Keyword(s):  
Willingness To Pay ◽  
Discrete Choice ◽  
Choice Experiments ◽  
Discrete Choice Experiments

scholarly journals The Impact of Environmental Sustainability Labels on Willingness-to-Pay for Foods: A Systematic Review and Meta-Analysis of Discrete Choice Experiments

Nutrients ◽  
2021 ◽  
Vol 13 (8) ◽  
pp. 2677
Author(s):  
Anastasios Bastounis ◽  
John Buckell ◽  
Jamie Hartmann-Boyce ◽  
Brian Cook ◽  
Sarah King ◽  
...  
Keyword(s):  
Willingness To Pay ◽  
Discrete Choice ◽  
Environmental Sustainability ◽  
Purchasing Power Parity ◽  
Meta Analysis ◽  
Choice Experiments ◽  
Discrete Choice Experiments ◽  
Environmental Damage ◽  
Environmentally Sustainable ◽  
The Impact

Food production is a major contributor to environmental damage. More environmentally sustainable foods could incur higher costs for consumers. In this review, we explore whether consumers are willing to pay (WTP) more for foods with environmental sustainability labels (‘ecolabels’). Six electronic databases were searched for experiments on consumers’ willingness to pay for ecolabelled food. Monetary values were converted to Purchasing Power Parity dollars and adjusted for country-specific inflation. Studies were meta-analysed and effect sizes with confidence intervals were calculated for the whole sample and for pre-specified subgroups defined as meat-dairy, seafood, and fruits-vegetables-nuts. Meta-regressions tested the role of label attributes and demographic characteristics on participants’ WTP. Forty-three discrete choice experiments (DCEs) with 41,777 participants were eligible for inclusion. Thirty-five DCEs (n = 35,725) had usable data for the meta-analysis. Participants were willing to pay a premium of 3.79 PPP$/kg (95%CI 2.7, 4.89, p ≤ 0.001) for ecolabelled foods. WTP was higher for organic labels compared to other labels. Women and people with lower levels of education expressed higher WTP. Ecolabels may increase consumers’ willingness to pay more for environmentally sustainable products and could be part of a strategy to encourage a transition to more sustainable diets.

scholarly journals Users are willing to pay for sanitation, but not as much as they say: empirical results and methodological comparisons of willingness to pay for peri-urban sanitation in Lusaka, Zambia using contingent valuation, discrete choice experiments, and hedonic pricing

2020 ◽  
Vol 10 (4) ◽  
pp. 756-767 ◽  
Author(s):  
James B. Tidwell
Keyword(s):  
Willingness To Pay ◽  
Contingent Valuation ◽  
Discrete Choice ◽  
Controlled Trial ◽  
Choice Experiments ◽  
Hedonic Pricing ◽  
Discrete Choice Experiments ◽  
Randomized Controlled ◽  
Urban Sanitation ◽  
Demand Assessment

Abstract Significant investment is needed to improve peri-urban sanitation. Consumer willingness to pay may bridge some of this gap. While contingent valuation has been frequently used to assess this demand, there are few comparative studies to validate this method for water and sanitation. We use contingent valuation to estimate demand for flushing toilets, solid doors, and inside and outside locks on doors and compare this with results from hedonic pricing and discrete choice experiments. We collected data for a randomized, controlled trial in peri-urban Lusaka, Zambia in 2017. Tenants were randomly allocated to discrete choice experiments (n = 432) or contingent valuation (n = 458). Estimates using contingent valuation were lower than discrete choice experiments for solid doors (US$2.6 vs. US$3.4), higher for flushing toilets ($3.4 vs. $2.2), and were of the opposite sign for inside and outside locks ($1.6 vs. $ − 1.1). Hedonic pricing aligned more closely to discrete choice experiments for flushing toilets ($1.7) and locks (−$0.9), suggesting significant and inconsistent bias in contingent valuation estimates. While these results provide strong evidence of consumer willingness to pay for sanitation, researchers and policymakers should carefully consider demand assessment methods due to the inconsistent, but often inflated bias of contingent valuation.

scholarly journals Scope Elasticity of Willingness to pay in Discrete Choice Experiments

2021 ◽  
Author(s):  
Anders Dugstad ◽  
Kristine M. Grimsrud ◽  
Gorm Kipperberg ◽  
Henrik Lindhjem ◽  
Ståle Navrud
Keyword(s):  
Willingness To Pay ◽  
Discrete Choice ◽  
Stated Preference ◽  
Choice Experiments ◽  
Discrete Choice Experiments ◽  
Model Specification ◽  
Economic Significance ◽  
Scope Sensitivity ◽  
Order Of Magnitude ◽  
Unit Of Measurement

AbstractSensitivity to scope in nonmarket valuation refers to the property that people are willing to pay more for a higher quality or quantity of a nonmarket public good. Establishing significant scope sensitivity has been an important check of validity and a point of contention for decades in stated preference research, primarily in contingent valuation. Recently, researchers have begun to differentiate between statistical and economic significance. This paper contributes to this line of research by studying the significance of scope effects in discrete choice experiments (DCEs) using the scope elasticity of willingness to pay concept. We first formalize scope elasticity in a DCE context and relate it to economic significance. Next, we review a selection of DCE studies from the environmental valuation literature and derive their implied scope elasticity estimates. We find that scope sensitivity analysis as validity diagnostics is uncommon in the DCE literature and many studies assume unitary elastic scope sensitivity by employing a restrictive functional form in estimation. When more flexible specifications are employed, the tendency is towards inelastic scope sensitivity. Then, we apply the scope elasticity concept to primary DCE data on people’s preferences for expanding the production of renewable energy in Norway. We find that the estimated scope elasticities vary between 0.13 and 0.58, depending on the attribute analyzed, model specification, geographic subsample, and the unit of measurement for a key attribute. While there is no strict and universally applicable benchmark for determining whether scope effects are economically significant, we deem these estimates to be of an adequate and plausible order of magnitude. Implications of the results for future DCE research are provided.

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