Status Quo Alternative Research Articles

Influence of survey engagement and multiple-choice heuristics in the estimation of the value of a statistical life

Estimating the value of non-market goods, such as reductions in mortality risks due to traffic accidents or air pollution, is typically done using stated choice (SC) data. However, issues with potential estimation biases due to the hypothetical nature of SC experiments arise, as protest choices are common and survey engagement is not constant across respondents. Further, if respondents choose to use different choice mechanisms and this is not considered, the results may also be biased. We designed an SC experiment to estimate the willingness to pay (WTP) for mortality risk reductions, that allowed us to simultaneously estimate the WTP to reduce the risk of traffic accident deaths and cardiorespiratory deaths due to air pollution. We formulated and estimated a multiple heuristic latent class model that also considered two latent constructs: Institutional Belief, to consider protest responses, and survey Engagement as a class membership covariate. We found, first, that individuals with lower institutional belief gave a higher probability of choice to the status-quo alternative, shying away from programs involving governmental action. Second, that not identifying respondents who do not appropriately engage in the experiment, biased the WTP estimators. In our case WTP decreased up to 26% when two different choice heuristics were allowed for in the model.

Cost vector effects in discrete choice experiments with positive status quo cost

An important component of the design phase of a discrete choice experiment (DCE) is formulating the cost vector, which specifies the costs of the alternatives and enables the calculation of marginal willingness to pay (WTP) estimates. If the cost vector affects choice behaviour, welfare estimates may depend on the choice of the cost vector, which leads to problems with the validity and reliability of DCE results. We employ a split-sample design to examine cost vector effects on choice behaviour and WTP estimates. Our data come from a DCE on agri-environmental policies to a nationally representative sample in Finland. We provide additional insights compared to previous research by including four cost vectors with otherwise identical surveys and experimental designs and a positive cost for the status quo alternative, with cost levels for policy alternatives both below and above the status quo cost. We obtain some evidence that the cost vector affects choice behaviour, as the proportion of status quo choices is larger with higher cost vectors. Both absolute and relative cost levels matter for choices. The marginal WTP estimates are highest in the sub-sample with the largest range cost vector that has cost levels both below and above the status quo cost. We suggest more careful pre-testing of the cost levels compared to current practices to determine a plausible range of cost levels to produce valid welfare estimates.

The perils of friendly oversight

Decision makers often rely on experts' evaluations to decide on complex proposals. Proponents want the approval of their proposals and can work to improve their quality. The scrutiny of experts ought to push proponents to work harder, leading to high-quality proposals. Experts, however, have their own agendas: they may favor or oppose the proposals under their scrutiny. We study how the expert's agenda affects the likelihood that proposals are approved and their quality. We show that an expert in favor of a proposal can be detrimental towards its approval. This happens when it is easy to incentivize the proponent to work and when the status quo alternative is not too attractive.

Tension in Mexico's energy transition: Are urban residential consumers in Aguascalientes willing to pay for renewable energy and green jobs?

Via a discrete choice experiment (DCE), a sample of urban residents that contribute to their household electricity bill in Aguascalientes, Mexico, has been asked to choose from among four electricity contracts —a status quo alternative, and three alternatives described in terms of type of renewable energy source (RES), % of RES in current electricity mix, new jobs in RE sector, and % increase in self-reported bimonthly electricity bill. Respondents report a positive willingness to pay (WTP) for both RES and new jobs in RE sector, and a higher WTP for solar energy in comparison to biomass energy. These results are timely as there is a tension in Mexico due to the energy strategy pursued by the current federal administration —which in practice has slowed down the energy transition initiated in 2015. This paper's findings suggest that respondents to our DCE would support a just energy transition aiming to boost both RES and the creation of green jobs.

Decision with multiple alternatives: Geometric models in higher dimensions — the disk model

This work is a continuation of Mallahi-Karai and Diederich (2019), where the authors introduced and studied the cube model as a multi-dimensional extension of the diffusion model in binary choice model. The aim of this note is to introduce and study the disk model, which can be viewed as a variation of the model introduced in the aforementioned paper. Here, we consider a choice situation with three alternatives, one of which is a status quo alternative. After studying this model, we will discuss the question of equivalence between the disk model and the cube model in two-dimensions and highlight connections to the approach by Smith (2016).

Effects of the number of alternatives in public good discrete choice experiments

Choice experiments (CEs) are commonly used to estimate monetary values for characteristics of public goods, but there are unresolved design issues. The number of alternatives is one of them. Increasing the number of alternatives increases the potential information learned from a sample of a limited size, which may assist subjects in selecting a preferred alternative (referred as matching) or may make choices more difficult (referred as complexity). A convergent-validity study is conducted to compare CE designs with status quo (SQ) plus one, two or three alternatives. To enhance convergent-validity insights, we use the SQ plus one treatment, which is a theoretically supported treatment, as a counterfactual treatment. We fail to find convergent validity between the one-alternative treatment and the two- and three-alternative treatments. Yet there is little difference in welfare estimates between the two- and three-alternative treatments. We find a net matching effect in the one-alternative treatment as the number of attribute-level changes increases, which reduces the likelihood of choosing the SQ alternative. We find net complexity effects in the two- and three-alternative treatments, which increases the likelihood of subjects choosing the SQ alternative as the number of choice questions increases. Our results support the use of SQ plus one-alternative design, suggest caution when using a SQ plus two- and three-alternative designs.

Loss aversion, reference dependence and diminishing sensitivity in choice experiments

This paper tests for the existence of loss aversion, reference dependence and diminishing sensitivity in a discrete choice experiment (DCE). A status quo alternative is introduced in a DCE of nurses' job choices and modeled as an individual-specific third alternative representing the respondent's current job. This provides a feasible method for including a status quo, which changes the reference point for each respondent. The increased salience of the status quo changes the size of any losses or gains when comparing Job A or Job B with their current situation, and since losses are valued more than gains, affects the marginal utility of each attribute. Models that differentially incorporate loss aversion, reference dependence and changes in sensitivity yield varying estimates of marginal rates of substitution, suggesting that consideration of these effects is important, particularly when policy implications are sought.

A discrete choice experiment to explore patients’ preferences for kidney transplant monitoring by teleconsultation

Introduction We conducted an exploratory Discrete Choice Experiment (DCE) over a sample of 68 kidney transplanted patients to determine their preferences for the modalities of their follow-up consultations by nephrologist including the possibility of a never experienced modality relying on teleconsultations. Methods A DCE survey with a two alternatives design including a status quo alternative was presented in four choice sets to the participants who were currently followed by face-to-face medical consultations in the University Hospital of Nantes or in a local hospital. Hypothetical scenarios of follow-up consultations were described using four attributes with varying levels: the flexibility in consultations planning, the type of consultation (whether face-to-face at the hospital or a teleconsultation) and the time it requires combined into one single attribute, the risk of kidney graft failure and the patients’ out-of-pocket expenses per consultation. The econometric analysis was undertaken by fitting conditional logit model with and without interaction terms to explore the influence of age and gender on preference weights. We also estimated mixed logit regression models allowing for correlations between the random parameters to tackle the issue of unobserved individual heterogeneity in terms of variations in tastes and scale. Results The level of kidney graft failure risk and the out-of-pocket expenses were highly significant and were negatively correlated to the probability of choosing an alternative. The possibility to plan the consultations with more flexibility than usual does not seem to determine patients’ choices. We find only weak evidence of the importance of the type of consultation when controlling for both observed and unobserved heterogeneity such that the participants prefer face-to-face in-hospital consultations to teleconsultations. Regarding individual heterogeneity, we observe no influence of gender and age, but the estimation of mixed logit models suggests the presence of unobserved heterogeneity, especially with regards to the type of consultation. Conclusion Our exploratory study suggests that kidney transplanted patients are primarily interested by the outcomes of their follow-up consultation (risk of graft failure and out-of-pocket expenses) rather than procedural aspects such as the type of consultation and the possibility to plan the consultations with more flexibility than usual. Notably, we found weak evidence suggesting that the patients may prefer in-hospital consultations to teleconsultations, all other things being equal. This could be an obstacle in promoting teleconsultations. However, it may be interesting to devote future researches to explore more in depth individual heterogeneity regarding the preference for the type of consultation.

Incremental cost and cost-effectiveness of low-dose, high-frequency training in basic emergency obstetric and newborn care as compared to status quo: part of a cluster-randomized training intervention evaluation in Ghana

BackgroundLow-dose, high-frequency (LDHF) training is a new approach best practices to improve clinical knowledge, build and retain competency, and transfer skills into practice after training. LDHF training in Ghana is an opportunity to build health workforce capacity in critical areas of maternal and newborn health and translate improved capacity into better health outcomes.MethodsThis study examined the costs of an LDHF training approach for basic emergency obstetric and newborn care and calculates the incremental cost-effectiveness of the LDHF training program for health outcomes of newborn survival, compared to the status quo alternative of no training. The costs of LDHF were compared to costs of traditional workshop-based training per provider trained. Retrospective program cost analysis with activity-based costing was used to measure all resources of the LDHF training program over a 3-year analytic time horizon. Economic costs were estimated from financial records, informant interviews, and regional market prices. Health effects from the program’s impact evaluation were used to model lives saved and disability-adjusted life years (DALYs) averted. Uncertainty analysis included one-way and probabilistic sensitivity analysis to explore incremental cost-effectiveness results when fluctuating key parameters.ResultsFor the 40 health facilities included in the evaluation, the total LDHF training cost was $823,134. During the follow-up period after the first LDHF training—1 year at each participating facility—approximately 544 lives were saved. With deterministic calculation, these findings translate to $1497.77 per life saved or $53.07 per DALY averted. Probabilistic sensitivity analysis, with mean incremental cost-effectiveness ratio of $54.79 per DALY averted ($24.42–$107.01), suggests the LDHF training program as compared to no training has 100% probability of being cost-effective above a willingness to pay threshold of $1480, Ghana’s gross national income per capita in 2015.ConclusionThis study provides insight into the investment of LDHF training and value for money of this approach to training in-service providers on basic emergency obstetric and newborn care. The LDHF training approach should be considered for expansion in Ghana and integrated into existing in-service training programs and health system organizational structures for lower cost and more efficiency at scale.

Spatially explicit demand for afforestation

Afforestation is a stated goal in European Union policy and several member states have already implemented schemes to extend forest cover. However, little is known about the magnitude of non-market benefits of afforestation and how these benefits spatially differ. In this article, we propose a novel method to spatially explicitly predict marginal willingness to pay for afforestation. The approach is illustrated with data from a discrete choice experiment on local land use changes in Germany. GIS data on the respondent's place of residence allows inferring their current endowment with forest, which enters the utility specification of each respondent's status quo alternative. Marginal willingness to pay estimates therefore represent the value of changes in local forest cover relative to the observed status quo. This relationship can be utilized to predict willingness to pay at the county level. We find that marginal willingness to pay decreases as the current endowment with forest increases. The estimated optimal share of forest based on the average respondent's preferences is between 50 and 60%. The associated county level predictions of marginal and total willingness to pay can be used to inform national, regional and local policies that aim to increase forest cover.

Uncovering context-induced status quo effects in choice experiments

In this study five design dimensions are varied systematically investigating context-induced status quo effects in choice experiments. Additionally, two structural complexity measures, entropy and the number of attribute level changes, are used to capture status quo effects from the similarity between alternatives and the number of trade-offs. A crucial finding is that the frequency of status quo choices is negatively associated with the number of alternatives indicating preference matching effects. By contrast, the probability of choosing the status quo increases with a higher number of choice tasks, a wider level range, and the similarity between alternatives. Status quo choices are further affected by the current environmental situation perceived by respondents. We also find that marginal and non-marginal welfare estimates are significantly affected by the choice design. One key finding is that the most used choice task format in environmental economics, i.e., two hypothetical and a status quo alternative, is likely to increase the propensity to choose the status quo option.

Modelling asymmetric preferences for water quality in choice experiments with individual-specific status quo alternatives

Abstract The use of scientific and uniform measures of environmental conditions for the status quo alternative in discrete choice experiments is not always feasible and may bias welfare estimates if respondents’ perceptions diverge from the provided current state. This paper presents a choice experiment with individual-specific status quo alternatives, defined based on respondents’ own assessment of current and future environmental conditions. We test the properties of prospect theory and examine preference heterogeneity, asymmetry and nonlinearity for eutrophication-related water quality attributes. We find consistent evidence of asymmetric preferences and loss aversion for the water quality attributes, with the value of losses being larger than corresponding gains. In our case, a symmetric modelling approach results in biased welfare estimates. However, there is no evidence of diminishing marginal values. The study demonstrates that individual and perceptions-based status quo alternatives are a feasible option in choice experiments for readily-observable and familiar goods such as water quality. Based on the findings, water resource policies that focus on preventing the deterioration of water quality and target blue–green algal blooms and water clarity lead to higher welfare gains. Despite the use of perceived reference water quality, the results allow for identifying the value of changes in scientifically measured water quality and can be used to support water resource management.

Does Public Funding Affect Preferred Tradeoffs and Crowd-In or Crowd-Out Willingness to Pay? A Watershed Management Case

In discrete choice experiments, survey participants are often asked to consider stated cost, to themselves, as a source of funding of an environmental project. An open question remains whether participants would consider an additional source of funding, such as public or federal support. We examine the impact of federal funding availability on the marginal utility of management attributes and on respondents’ private willingness to pay (WTP) for watershed management plans. Our results suggest that availability of public funding does not significantly alter the preferred tradeoffs among management attributes for active management plans, but alters the utility difference, and therefore the WTP, between an active plan and the status quo alternative. A latent class model further suggests that classes with relatively similar preferences may nonetheless show heterogeneity in how availability of public funds affects WTP for management plans against the status quo, depending on individuals’ sociodemographic profiles and environmental attitudes. Public funding affects WTP through both crowding-in and crowding-out effects. Our results suggest that private responses to public funds may be more complex than previous studies on public goods have suggested, as public funds may neither attract contributions nor crowd out private support uniformly.

Supermajority voting, social indifference and status quo constraints

We develop several results related to equilibrium in sophisticated voting under an amendment agenda procedure and supermajoritarian voting rules. Contrary to the simple majority case, we demonstrate that attainable equilibria are a function of the location of the status quo ex ante as well as the tie-breaking rule in place. Most importantly, we demonstrate that the Banks set (the set of sophisticated voting outcomes) does not reduce to the core under certain conditions. Moreover, in generalizing and extending the results in Colomer (1999), we define three analytically distinct regions, defined by the location of the status quo alternative, which determine the extent of the intersection between the Banks set and the core.

Scale and taste heterogeneity for forest biodiversity: Models of serial nonparticipation and their effects

Serial non-participation is a response behavior that is frequently found in stated choice experiments. One form of serial non-participation is that a varying number of respondents chooses always the zero-price or status quo alternative. The approaches used in the literature to deal with this problem vary from excluding those respondents to using applying latent class models to endogenously allow for different preference structures. However, latent class models also allow to assign respondents to a known class. In this paper we compare specifications of latent class models with and without restrictions. Additionally, we control for differences in the error variance across respondents by applying a scale-extended latent class model. The comparisons are designed to show whether respondents are allocated differently among classes and whether willingness to pay estimates are affected significantly. The data are from a choice experiment regarding management actions to enhance forest biodiversity. The data set is characterized by a high percentage of respondents who were not willing to pay; almost 50% of the respondents always chose the zero price alternative locating this sample rather at the top of the range of respondents who are not willing to pay.

Improving the strategic investment decisions: The essence of active decision support system

Strategic investment decisions are both important cnnd difficult as they concern very serious issues /requiring a lot of investment in terms of finance and /manpower which is considered as important and • critical in any serious organisation. These strategic investment decisions are more easily understood and controlled than most of the other activities undertaken within the framework of strategic management. Traditional approaches to strategic investment appraisal have been criticised on a number of grounds among which are their narrow organisational perspective, exclusion of nonfinancial benefits, overemphasis on short-term, faulty assumptions about the status quo alternative, inconsistent treatment of inflation and promotion of non-value adding behaviour. Yet in spite of these apparent flaws with traditional investment appraisal techniques, businesses continue to rely upon them; as a consequence, there is a possibility not only for misguided investment decisions but also the possibility of a perversion of senior manager's business imperative: instead of investing in the company's long-term core business, senior managers become side-tracked and start investing for short-term cash flows. In the light of these criticisms, two basic approaches that can be taken to develop alternative investment appraisal techniques were proposed; with the first approach involving the modification of the traditional investment analysis framework to correct its various technical shortcomings such as inflation inconsistencies, the use of inappropriately high discountfactors and its narrow focus expanded to include commonly neglected benefits such as improvements in flexibility, improvements in information quality, timeliness etc. while the second approach involves reliance on analytical framework that represent significant departures from the traditional methods; such as strategic cost management, the multi-attribute decision model, value analysis, the analytical hierarchy method, uncertainty method etc. Beyond these available alternatives, this paper concludes that since Hyperknowledge, an active support systems have been used as problem solving and decision support environments for strategic management and for strategic decision making in a number of industries in recent years; it appears that the logic of a strategic investment decision is complex enough for a decision maker to benefit from the use of a hyperknowledge environment, and that a hyperknowledge support system could help a management team to control the problems with deciding, launching and following up on strategic investment projects.

Status Quo Effect in Choice Experiments: Empirical Evidence on Attitudes and Choice Task Complexity

Many studies on individual decision making have shown that a disproportionate number of respondents choose the status quo (SQ) alternative. But it is still unclear what motivates individuals to disproportionately select the SQ alternative. Using data from two choice experiments about forest biodiversity, we find evidence that a protest attitude, an attitude toward the good, and perceived choice task complexity influence the choice of the SQ. However, only the attitude toward the good in question and the protest attitude show significant effects across all econometric specifications.

Convergent Validity of Attribute-Based, Choice Questions in Stated-Preference Studies

The application of attribute-based choice questions is well established in the marketing literature, but there are unique aspects of the design that warrant investigation to assess their validity for economic welfare estimation. Three design issues are investigated in this paper: (1) the placement of the monetary stimulus (policy cost to respondents) in the sequence of attributes, (2) the number of policy alternatives respondents are asked to consider in choice questions (two versus three), and (3) the inclusion, versus exclusion, of a status-quo alternative in choice questions. The data used to implement these investigations are from a survey designed to estimate the value Maine residents place on a farmland conservation easement program. Tests of convergent validity indicate that the placement of the monetary stimulus, first versus last in the list of attributes, did not affect estimates of preference parameters, significant differences between questions with three versus two alternatives did occur, and the inclusion/exclusion of a status-quo alternative did not affect preference parameters.

The effect of incidental affect on preference for the status quo

The authors report results from four experiments that describe the influence of incidental affect on preference for the status quo. The first and second experiments, each using different affect induction methods, demonstrated that positive affect increased and negative affect reduced the choice of the status quo alternative. The third experiment replicated the effect of incidental affect on a separate dimension of status quo bias, the preference of omission. The last experiment investigated whether preference for the status quo was affected by four specific emotions that differed along valence and certainty appraisal dimensions. Compared with affective states associated with uncertainty, affective states associated with certainty led to a greater magnitude of status quo bias. The certainty appraisals mediated the effect of specific emotions on preference for the status quo, regardless of the emotion valence. The findings extend our knowledge by showing that incidental affect can influence consumer choice through emotion-related appraisals.

Valuing externalities from water supply: Status quo, choice complexity and individual random effects in panel kernel logit analysis of choice experiments

Choice experiments are often implemented with choice sets including one alternative depicting the status quo. Utility from status quo is experienced by the respondent, while utility associated with experimentally designed hypothetical alternatives is only conjectured by respondents. The effects of explicitly accounting for such a difference in the econometric analysis of the data are often unreported, or limited to fitting a ‘status quo’ constant. The paper proposes a model that explicitly accounts for these effects and attempts their decomposition using data from two choice modelling exercises designed to value the provision of environmental goods. Preferences for change versus status quo are explored with standard specifications along with a less usually applied error component analysis via mixed logit. The results suggest that alternatives offering changes from status quo do not share the same preference structure as the status quo alternative, and that estimates of spread parameters in zero-mean error components can be decomposed conditional on respondents' socio-economic characteristics. It is argued that these findings have implications for practitioners and their stance towards the strategies for the econometric analysis of choice modelling data for the purpose of valuation.