The Effect of Protest Votes on the Estimates of Willingness to Pay for Use Values of Recreational Sites
32 Pages Posted: 12 Dec 2001
Date Written: December 2001
Selectivity bias caused by protest responses in Contingent Valuation studies can be detected and corrected by means of sample selection models. This paper compares two methods: the Heckman 2-steps method and the full ML, applied to data on forest recreation - where WTP is elicited as a continuous variable. Either method has its own drawback: computational complexity for the ML method, susceptibility to collinearity problems for the 2-steps method. The latter problem is observed in our best fitting specification, with the ML estimator outperforming the 2-steps. In this application, overlooking the effect of protest responses would cause an upwards bias of the final estimates of WTP.
Keywords: Contingent valuation, protest responses, sample selection, MLE, two-steps method
JEL Classification: C35, C51, C81, D60, H41, Q26
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