Scale heterogeneity in the valuation of road traffic risk reductions: the case of Newfoundland's moose-vehicle collisions

Abstract

ABSTRACTThe willingness to pay (WTP) for reductions in the risk of moose-vehicle collision in Newfoundland (the insular portion of Newfoundland and Labrador, Canada) is estimated using the Contingent Valuation Method. Our estimations use the information obtained from a double-bounded payment format and let us examine the existence of scale heterogeneity (dependent on response certainty levels), question effects such as anchoring and shift effects, and the effects of accounting for the former on the latter. Our main findings are that the estimated WTP tends to be lower in the models that account for scale heterogeneity but that correction makes little difference in models that fully correct for the question effects involved in the use of the double-bound payment format. Accounting for scale heterogeneity does change, however, the way in which corrections for question effects influence the size of welfare estimates. In particular, it reduces the variability of welfare measures across treatments of these question effects, yielding an estimate of WTP close to the one obtained from using the single-bounded portion of the data.