Abstract
Recent studies in the marketing literature developed a new method for eliciting willingness to pay (WTP) with an open-ended elicitation format: the Range-WTP method. In contrast to the traditional approach of eliciting WTP as a single value (Point-WTP), Range-WTP explicitly allows for preference uncertainty in responses. The aim of this paper is to apply Range-WTP to the domain of contingent valuation and to test for its theoretical validity and robustness in comparison to the Point-WTP. Using data from two novel large-scale surveys on the perception of solar radiation management (SRM), a little-known technique for counteracting climate change, we compare the performance of both methods in the field. In addition to the theoretical validity (i.e. the degree to which WTP values are consistent with theoretical expectations), we analyse the test-retest reliability and stability of our results over time. Our evidence suggests that the Range-WTP method clearly outperforms the Point-WTP method.
Highlights
There is a long-lasting and ongoing debate about the best method to elicit willingness to pay (WTP) for contingent valuation (CV) of non-market goods in environmental [1], agricultural [2, 3] and health economics [4, 5]
The open-ended method has been criticized for the high cognitive load it imposes on respondents, a high number of observed non- or zero responses, and the fact that the distribution of responses is typically heavily skewed towards high amounts which might be caused by a strategic bias [11]
As an alternative, closed-ended methods have been developed where respondents select a value from a pre-specified list or where WTP is derived from dichotomous choices
Summary
There is a long-lasting and ongoing debate about the best method to elicit willingness to pay (WTP) for contingent valuation (CV) of non-market goods in environmental [1], agricultural [2, 3] and health economics [4, 5]. [12,13,14]), dichotomous choices are statistically inefficient and may be prone to the ‘yea-saying bias‘, i.e. a tendency to accept presented amounts [14,15,16,17,18,19]. In view of these issues a number of authors have questioned the superiority of closed-ended over open-ended methods [7, 8, 14, 17, 20,21,22]
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