Chapter 7 - The Use of Stated Preference Methods to Value Cultural Heritage

Abstract

Abstract This chapter briefly defines cultural heritage, before considering the relative merits of stated preference methods in relation to revealed preference in deriving economic values for cultural goods. Section 7.2 outlines the distinction between contingent valuation (CV) and discrete choice experiment (CE) methods, before outlining some applications of CV methods in estimating consumer surplus and maximum revenue for cultural goods. Section 7.3 outlines choice experiments, experimental design, and the random utility theory underlying CEs. Section 7.4 presents the standard conditional logit and multinomial logit models, and discusses their use in valuing cultural heritage. The restrictive assumptions of these two models are described as a prelude to presentations of other choice experiment models that relax some or all of these assumptions. These models are: the nested logit, covariance-heterogeneity, heteroscedastic extreme value, mixed logit random parameter, error component, multinomial probit, and latent class or finite mixture models. Applications of each of these models to cultural heritage are provided. Section 7.5 considers how price and economic values are derived from utility estimates. It discusses values directly derived in willingness to pay space, and the importance of calculating market share and of identifying those who are willing to pay for an improvement to the status quo level of a cultural good. Section 7.6 explores how CE models can be extended or enhanced by the consideration of: interaction effects between the attributes of a cultural good; controlling for choice complexity; addressing non-attendance of attributes in respondent’s choices; considering the scale problem; asymmetry between willingness to pay and willingness to accept compensation for the equivalent loss of a cultural good; the issue of utility maximization or regret minimization; the importance of considering respondents’ attitudes in choice models; and models combining revealed and stated preference to include what people actually demand, as well as what they say they would demand, in evaluating preferences and values for cultural goods. The conclusion in Section 7.7 briefly summarizes the chapter and provides some thoughts for future research.