Consequentiality and Demand Revelation in Double Referenda

in Environmental Economics, Experimental Methods, eds. T.L. Cherry, S. Kroll, and J.F. Shogren (Oxford, UK: Routledge Press), pp. 407-423, 2008

34 Pages Posted: 12 Sep 2013

See all articles by Katherine Silz Carson

Katherine Silz Carson

US Air Force Academy

Susan M. Chilton

University of Newcastle - Economics

W. George Hutchinson

Queen's University Belfast

Date Written: January 14, 2006

Abstract

Surveys used to elicit values for environmental public goods often employ variants of the referendum mechanism due to the cognitive simplicity and familiarity of respondents with the mechanism. One variant, the double referendum mechanism, requires respondents to state twice how they would vote for a given policy proposal given their cost of the good. In this mechanism, the cost in the second referendum question is related to the subject’s response to the first referendum question. Data from these surveys often exhibit anomalies inconsistent with standard economic models of consumer preferences. There are a number of published explanations for these anomalies, mostly focusing on problems with the second vote. This paper reports the results of an experiment investigating two versions of a consequential double referendum mechanism. The aim is to determine whether introducing consequentiality induces demand revelation or fails to remove the sorts of anomalies observed in field survey data. The experiment also contains a qualitative follow-up questionnaire, enabling a comparison of the heuristics employed by subjects. The results have implications for the design and analysis of future field studies to estimate the economic benefits from environmental programs.

Keywords: Contingent valuation, demand revelation, experimental economics

JEL Classification: C91, Q51

Suggested Citation

Carson, Katherine Silz and Chilton, Susan M. and Hutchinson, W. George, Consequentiality and Demand Revelation in Double Referenda (January 14, 2006). in Environmental Economics, Experimental Methods, eds. T.L. Cherry, S. Kroll, and J.F. Shogren (Oxford, UK: Routledge Press), pp. 407-423, 2008. Available at SSRN: https://ssrn.com/abstract=2324359

Katherine Silz Carson (Contact Author)

US Air Force Academy ( email )

HQ USAFA/DFEG
2354 Fairchild Drive, Suite 6K110
USAF Academy, CO 80840-6299
United States

Susan M. Chilton

University of Newcastle - Economics ( email )

Newcastle-upon-Tyne NE1 7RU
United Kingdom

W. George Hutchinson

Queen's University Belfast ( email )

David Leir Building
Belfast, BT9 5AG
Ireland

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