Design Efficiency for Non-Market Valuation with Choice Modelling: How to Measure it, What to Report and Why

30 Pages Posted: 1 Sep 2008

See all articles by Riccardo Scarpa

Riccardo Scarpa

University of Waikato - Management School

John M. Rose

The University of Sydney

Abstract

We review the basic principles for the evaluation of design efficiency in discrete choice modelling with a focus on efficiency of WTP estimates from the multinomial logit model. The discussion is developed under the realistic assumption that researchers can plausibly define a prior belief on the range of values for the utility coefficients. D-, A-, B-, S- and C-errors are compared as measures of design performance in applied studies and their rationale is discussed. An empirical example based on the generation and comparison of fifteen separate designs from a common set of assumptions illustrates the relevant considerations to the context of non-market valuation, with particular emphasis placed on C-efficiency. Conclusions are drawn for the practice of reporting in non-market valuation and for future work on design research.

Suggested Citation

Scarpa, Riccardo and Rose, John M., Design Efficiency for Non-Market Valuation with Choice Modelling: How to Measure it, What to Report and Why. Australian Journal of Agricultural and Resource Economics, Vol. 52, No. 3, pp. 253-282, September 2008, Available at SSRN: https://ssrn.com/abstract=1261010 or http://dx.doi.org/10.1111/j.1467-8489.2007.00436.x

Riccardo Scarpa (Contact Author)

University of Waikato - Management School ( email )

Hamilton
New Zealand

John M. Rose

The University of Sydney ( email )

University of Sydney
Sydney, NSW 2006
Australia

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