A general model for treatment of protests and no-answer responses in contingent valuation method

Pei-Ing Wu,Szu-Hao Chen,Je-Liang Liou

doi:10.21511/ee.08(2).2017.04

Pei-Ing Wu, Szu-Hao Chen + Show 1 more

Open Access

https://doi.org/10.21511/ee.08(2).2017.04

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Abstract

This study formulates a general model to account for the protest responses and no-answer replies. The distinct characteristics of this model are general in three ways: simultaneously accounting for protest and no-answer responses, applicable to all kinds of elicitation formats in contingent valuation, and simplicity in estimation. Creation of inverse Mills ratio is the distinctive step in this general model. The inverse Mills ratio is continuously carried in the subsequent estimation for the modification of different types of elicitation formats in this general model. The results generally indicate that these ratios are significantly different from zero. This means that accounting for these Mills ratios does have an important role in such modification when protest responses and/or no-answer responses are both taken into account. The results show that overall total willingness to pay from the general model with inclusion of protest and no-answer responses under different types of elicitation formats are higher than those estimated by traditional treatment. The degree of underestimation of traditional treatment is between 26% and 67%. That is, the general model proposed here for treating protest and/or no-answer responses in contingent valuation method can account for the full information, which might be potentially omitted or inappropriately dealt with in the estimation.

Highlights

Contingent valuation method (CVM) is a widely used method for evaluation of non-market goods and services
The results generally indicate that these ratios are significantly different from zero. This means that accounting for these Mills ratios does have an important role in such modification when protest responses and/or no-answer responses are both taken into account
The results show that overall total willingness to pay (WTP) from the general model with inclusion of protest and no-answer responses under different types of elicitation formats are higher than those estimated by traditional treatment

Summary

Introduction

Contingent valuation method (CVM) is a widely used method for evaluation of non-market goods and services. Estimation of WTP and related information for each type of elicitation format with creation of Heckman’s inverse Mills ratio for the adjustment of Tobit or bivariate probit model with inclusion of non-protest, protest, and no-answer responses. To compare the results estimated from the general model developed in this study, which includes protest and no-answer responses, with those from traditional treatments of protests, estimations for the direct revelation of WTP format and for the hybrid type format with discrete choice and open WTP revelation are similar to equation (3) and (7) without variables of MLIMRA1, MLIMRF1, and HIMR1.

Specification of estimation models

Results and discussions

Conclusion