Hypothetical Bias in Dichotomous Choice Contingent Valuation Studies

University of Massachusetts Resource Economics Working Paper No. 2004-9

12 Pages Posted: 11 Oct 2004

See all articles by Michael Ash

Michael Ash

UMass-Amherst - Department of Economics; CPPA, UMass-Amherst

James J. Murphy

University of Alaska Anchorage

Thomas Stevens

University of Massachusetts at Amherst - College of Natural Resources & the Environment - Department of Resource Economics

Date Written: October 2004

Abstract

This paper uses a meta-analysis to explore the relationship between hypothetical bias and the price respondents are asked to pay. For public goods, the results clearly indicate a difference in the price elasticity between hypothetical and actual payment conditions. Since the bias increases for larger dollar amounts, any simple guidelines, such as NOAA's "divide by two" rule of thumb, could be misleading. Future attempts to calibrate contingent valuation responses should reflect this price sensitivity.

Keywords: Contingent valuation, experiments, hypothetical bias, meta-analysis, stated preference

JEL Classification: C9, Q26, Q28, H41

Suggested Citation

Ash, Michael and Murphy, James J. and Stevens, Thomas, Hypothetical Bias in Dichotomous Choice Contingent Valuation Studies (October 2004). University of Massachusetts Resource Economics Working Paper No. 2004-9, Available at SSRN: https://ssrn.com/abstract=601364 or http://dx.doi.org/10.2139/ssrn.601364

Michael Ash

UMass-Amherst - Department of Economics ( email )

10th Floor Thompson Hall
Amherst, MA 01003
United States

HOME PAGE: http://www.umass.edu/economics

CPPA, UMass-Amherst

Department of Operations and Information Managemen
Amherst, MA 01003
United States

HOME PAGE: http://www.masspolicy.net

James J. Murphy (Contact Author)

University of Alaska Anchorage ( email )

Anchorage, AK
United States
907-786-1936 (Phone)

HOME PAGE: http://faculty.cbpp.uaa.alaska.edu/jmurphy/

Thomas Stevens

University of Massachusetts at Amherst - College of Natural Resources & the Environment - Department of Resource Economics ( email )

Stockbridge Hall
80 Campus Center Way
Amherst, MA 01003-9246
United States

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