Willingness To Pay Estimates Research Articles

Subjective perceptions about benefit and cost levels in contingent valuation

Abstract This paper hypothesizes that respondents in contingent valuation surveys may form different benefit and cost levels that deviate from the levels specified by the researcher. The conceptual framework investigates potential biases based on the direction of deviations. Survey data on the restoration of wetlands in Tampa Bay show that a significant portion of the respondents deviate from the benefit and cost levels presented in the scenario. Empirical results indicate that willingness-to-pay (WTP) estimates are very sensitive to the perceived benefit and cost levels. Depending on the direction of the deviations, WTP estimates could fluctuate up to +61 percent and −82 percent, compared to the estimate from those who evaluate the scenario at the presented levels.

Contingent valuation versus choice experiment: estimating the willingness to pay for organic oranges in Vietnam

PurposeThe study estimates the willingness to pay for organic oranges and identifies its influencing factors among consumers in the Mekong Delta, Vietnam.Design/methodology/approachThe study used survey data from 413 households in the Mekong Delta from March 2022 to July 2022. The choice experiment (CE) and contingent valuation method (CVM) were employed to analyze consumers’ willingness to pay (WTP). STATA 17 software was used to analyze research data in the logit model and mixed logit model.FindingsThe research results from the CVM approach show that a number of demographic characteristics have a direct impact on WTP, such as education, educational attainment, family size, the presence of children and the elderly in the household, food safety and environmental awareness. The CE model shows product attributes that influence consumers’ WTP, such as country of origin, traceability, quality grade, organic certification, ecolabel and organic content. Both approaches show that price is the main barrier to organic orange consumption.Research limitations/implicationsThe study surveyed four large cities in four provinces representing the Mekong Delta region.Practical implicationsOur study helps administrators have a deeper insight into consumer preferences and behavior, specifically the factors that affect consumers' WTP, an important indicator of demand for the success of manufacturers and marketers in developing as well as improving marketing strategies. Knowledge of a product’s WTP on behalf of (potential) customers plays an important role in many areas of marketing management, such as pricing decisions or new product development.Social implicationsFurthermore, this understanding will inform policymakers about the future of agricultural markets in Vietnam and help them better prepare for the making of sustainable agricultural policies. Develop organic agriculture to both protect human health, protect the living environment and protect the soil from degradation, ensuring sustainable agricultural production. This is also one of the measures to help people stay away from diseases to limit the social burden.Originality/valueThe study confirms that both CVM and CE models can be used to estimate WTP. However, CVM fits the overall WTP estimate, while CE is more appropriate when estimating WTP for individual scenarios through combining attributes with different levels.

Willingness to pay for internet speed and quality

This paper adds to a growing literature on the willingness to pay (WTP) for internet services. We surveyed 5,200 respondents across four demographically diverse United States (US) states, and developed a curve-fitting WTP estimation technique that builds on existing conjoint analysis models. We find that users are willing to pay an extra $1.13 per month for a 1 megabits per second (Mbps) faster internet and $45.52 per month for better connection quality. We document a strong non-linearity: a given speed increment generates the most value for users with the slowest internet but confers negligible value on users with the fastest internet. Specifically, improving speed from 1 Mbps to 25 Mbps creates 2.32 times more value than improving from 25 Mbps to 100 Mbps. A similar non-linearity arises in terms of internet quality. We report large WTP discrepancies by income levels and employment status. The results corroborate that internet subsidies are most impactful if they first assist users with the poorest internet access. In this sense, subsidizing the right population could be as important as – if not more important than – raising funds to subsidize internet access.

Small‐sample properties of robust willingness‐to‐pay estimators

AbstractThe small‐sample properties of robust, binary choice willingness‐to‐pay (WTP) estimators are analyzed. A Monte Carlo simulation compares the bias and mean‐squared error of marginal and expected WTP estimates from probit, zero‐centered (“robit”), logit, and a generalized Tukey lambda distribution called a “pregibit” regression under normal and nonnormal distributional assumptions. Robust binary choice estimators allow for variation in tail thickness (the robit and pregibit) or tail asymmetry (the pregibit). No previous studies have compared the performance of these WTP estimators. The findings will interest researchers who use contingent validation methods to estimate WTP for nonmarket or hypothetical goods.

Revisiting heterogenous social desirability bias in consumer willingness to pay for food carbon label: Social norms and environmental concerns

Carbon labeling facilitates the evaluation of carbon emissions throughout the entire food production process. Consumer interpretation of food labels is subject to context. We conduct an online discrete choice experiment in four Chinese cities to investigate the potential how social desirability bias (SDB) may affect consumer willingness-to-pay (WTP) for milk carbon labels. Our findings indicate that failing to account for SDB leads to skewed WTP estimates. We observe a significant presence of SDB in WTP for carbon labels, particularly among respondents under subject to injunctive social-norm treatment. Additionally, our research shows that SDB can manifest differently among consumers with varying levels of environmental commitment. This research provides crucial insights for both policymakers and marketers in food carbon labeling. It highlights the importance of considering SDB and emphasizes the necessity of developing tailored strategies across different consumer segments.

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The present study endeavors to elucidate the variability in estimates of willingness-to-pay (WTP) concerning the mitigation of mortality risk attributable to air pollution, contingent upon the extent of the corresponding risk reduction. Through the lens of air pollution control projects, the research seeks to discern fluctuations in WTP estimates, thereby shedding light on the intricacies of decision-making processes surrounding environmental management initiatives. The salience of this inquiry stems from the escalating prevalence of methodologies employing willingness-to-pay assessments as a yardstick for evaluating the value of human life across diverse spheres of societal activity, thereby informing policy deliberations by regulatory authorities. Central to the research quandary is the recognition that alterations in the magnitude of risk reduction can engender disproportional shifts in WTP values, holding all other variables constant. This phenomenon engenders a profound reliance on the methodological framework employed, thereby exerting a substantial influence on the resultant cost-of-living appraisals. Employing the contingent valuation method grounded in stated preferences within a double dichotomous choice framework, empirical findings reveal that WTP for reducing mortality risk from air pollution escalates by 43.8 %, ascending from 11 713 to 16 839 rubles, concomitant with a twofold increase in the reduction rate, from 2.5 to 5.0 per 10,000 inhabitants. This equates to a reduction in mortality rates from 100.0 to 97.5 and 100.0 to 95.0 per 10,000 inhabitants, respectively, all else being equal. The implications drawn from these conclusions are pivotal in guiding the formulation, execution, and interpretation of research endeavors pertaining to cost-of-living assessments across diverse contexts. Furthermore, they furnish critical insights for substantiating policy decisions within regulatory bodies, thereby enhancing the efficacy and integrity of environmental management initiatives.

Consequences of omitting non-lethal wildlife impacts from stated preference scenarios

Stated preference (SP) research on willingness to pay (WTP) for improvements to wildlife populations focuses almost universally on measures related to whether organisms live or die. Preferences for changes in non-lethal harm to wildlife are generally overlooked. To evaluate the consequences, this article develops a theoretical model and corresponding discrete choice experiment (DCE) to evaluate whether and how the omission of information on non-lethal wildlife harm influences WTP estimation, grounded in a case study of marine plastic reductions in the North Atlantic. The theoretical model suggests that when environmental programs have both lethal and non-lethal impacts on wild species, DCEs that omit information on the latter may not produce valid welfare measures. Empirical results show that the omission of this information has multiple impacts on welfare estimates, largely consistent with theoretical predictions. Results suggest that welfare estimates for wildlife improvements can be confounded by the omission of information on non-lethal harm from SP scenarios. Results also demonstrate the hazards of excluding potentially welfare-relevant information from SP scenarios when respondents might assume relationships between omitted information and other material included in the questionnaire.

Valuing drinking water quality after a PFAS contamination event: Results from a meta-analysis benefit transfer

Drawing upon an extensive body of valuation literature focused on water quality, this paper performs a meta-analysis benefit transfer exercise aimed at quantifying willingness to pay (WTP) for an enhancement in drinking water quality for households that have been directly exposed to Perfluoroalkyl Substances (PFAS) over recent decades in Italy. The analysis compiles metadata of 72 WTP estimates extracted from 40 previous valuation studies conducted in advanced economies. The benefit transfer is realized estimating a meta regression model (MRM) which includes both study design and socio-economic explanatory variables, according to the Weak Structural Utility Theoretic approach. To determine the most suitable MRM specification, a comparative evaluation of various model configurations is developed exploiting the Least Absolute Shrinkage and Selection Operator (LASSO) selection criterion, and assessing their predictive performances in terms of transfer error and explanatory power. The mean transfer error (MTE) and the adjusted R-squared of the preferred MRM are in line with past published meta-analyses (0.665 and 0.607, respectively). The parameters estimated in the model align with both economic theory and intuition. The benefit transfer process results in an estimated annual WTP of € 250.80 per household for improved drinking water quality in the PFAS-affected area and an aggregated value of social benefits from PFAS decontamination of around € 12 million.

Households’ willingness-to-pay for different strategies aimed at reducing water supply network dysfunctions. A French case-study

ABSTRACT Using an original contingent valuation, this study compares the Willingness-To-Pay (WTP) of households for three water pipes renewal programs focused respectively on water quality, reducing leaks in networks and preventing breaks. A survey was conducted in southwest France: respondents were asked to rank the different renewal programs and then state the maximum amount they would be willing to pay in order to benefit from each. Results of a Heckman model suggest that variables influencing the probability of refusing to pay for a non-economic reason and the WTP differ from one program to another, which validates this choice of model. WTP estimates are not of the same order of magnitude whatever the program, and remained relatively low when compared to the actual water bill. While asset management is often only seen as an activity calling for specialised technical knowledge, users are able to perceive the outcome of that management process.

Improving willingness-to-pay studies for traditional food products in developing countries: Evidence using repeated experiments

Willingness-to-pay (WTP) studies for traditional food products are plausibly affected by unobserved decisions and strategic collusion between the experimenter and respondents. Similarly, WTP estimates in developing countries using a one-time survey might be inconsistent, as the acceptance of new products likely varies with exposure to product attributes. We use repeated experimentation, where subjects are randomised twice on treatments, to reduce hypothetical bias and account for dynamic convergences of consumers’ preferences. We rely on longitudinal variation in treatments, which allows subjects’ characteristics and setting to have little influence on WTP estimates. These experimental designs evaluated consumers’ preferences for cakes from high-quality cassava flour (HQCF) and wheat flour mixtures in Nigeria. When analysed separately and combined in panels, we find a time-consistent, insignificant difference in consumers’ preferences and WTP for all cake categories. Nonetheless, we find evidence of texture and moistness as favourable attributes of HQCF cakes. Intensifying agronomic research and processing techniques that enhance favourable attributes such as the texture and moistness of HQCF could improve acceptance.

Consumers preferences food safety perceptions for beef – a cross-country comparison in the wake of COVID-19

Food safety is a pressing global concern, particularly in developing and emerging economies. The recent COVID-19 pandemic has further heightened consumer attention towards food safety, quality, and maintaining a healthy diet. This study provides insights into consumer awareness and perceptions related to food safety and the origin of beef products, with a specific focus on the impact of COVID-19. It draws comparisons between emerging economies, specifically Albania and Kosovo, where significant food safety challenges exist, and a highly developed economy, Austria. To assess consumer preferences, a discrete choice experiment was conducted, aiming to gauge the significance of various product attributes and consumers’ willingness to pay (WTP) for specific product features. The study’s findings revealed a strikingly strong sense of consumer patriotism across all surveyed countries. WTP estimates indicated a clear preference for domestically sourced food over imported alternatives. While the COVID-19 pandemic exerted a notable influence, its effects were generally contained. However, respondents from emerging economies perceived the pandemic’s impact to be more severe. Additionally, factors such as risk perception and risk acceptance played a role in shaping the importance of relevant product attributes in all the food markets examined in this study. Furthermore, distinct variations emerged between the countries concerning the importance of food safety standards. For instance, in Albania, the European Union (EU) food safety certificate holds higher utility compared to the national certificate, suggesting a potential lack of trust in national agencies. Notably, low trust in institutions, including those related to food safety, is a common issue in emerging and developing economies. This lack of trust, in turn, influences consumers’ perceptions of personal food safety, given that it is a credence attribute.

Consumer willingness-to-pay for a resilient electrical grid

The research objective is to estimate consumer willingness to pay (WTP) for electricity grid fortification. Data are from a representative survey of Oklahoma citizens. Extreme weather events, aging utility infrastructure, increased demand for affordable energy, and terrorism threaten the safety and security of the way most citizens access electricity. This study is a first look at public willingness to support energy grid security measures in the United States Southern Great Plains. Findings suggest that consumers would pay an additional $14.69 in monthly utility bills for a fortified grid. This WTP estimate is close to a recent energy bill hike of $14 initiated by local electricity providers. The findings provide policymakers and energy providers with information on consumer willingness to support efforts to modernize the current grid.

High Public Good Values for Ecosystem Service Attributes of on-farm Quinoa Diversity Conservation in Peru

Agrobiodiversity is associated with a range of important but poorly quantified public good ecosystem services, the conservation of which requires public support. With a view to determining the general public’s willingness to pay (WTP) for such conservation, we organised interviews with 491 adult Peruvian residents in three regions a stated preference choice experiment (CE) to elicit the value they place on crop genetic resources conservation, using quinoa cultivation as a case study. Responses revealed strong support for the conservation of quinoa diversity particularly when conservation was framed in terms of conserving national cultural identity or food security. Respondents were willing to make a one-off donation of US$31.79 to an in situ on-farm quinoa crop diversity conservation programme, placing the highest values on programme attributes related to securing bequest/existence and option values, followed closely by stable landscape conservation. WTP was higher when the public was reminded that conservation also contributed to national cultural identify or food security. A conservative aggregation of the WTP estimates to the population of the three regions results in an estimated total WTP for quinoa conservation of US$24.18 m and a benefit-cost ratio of 1.22. Findings demonstrate the significant and frequently ignored social welfare benefits associated with non-market agrobiodiversity-related public good ecosystem services, in this case equivalent to just over a quarter of market production values. Such information can be used to design and prioritise quinoa genetic diversity conservation programmes with an emphasis on such attributes.

Estimación de la disponibilidad a pagar en dos acuíferos en Baja California, México

This study presents an assessment of the perceptions and willingness-to-pay (WTP) of farmers using groundwater for irrigation in two aquifers in northern Baja California, Mexico. Contingent Valuation (CV) measured their WTP to ensure availability of groundwater in the future. Data from surveys of 70 and 54 farmers in the Maneadero and Guadalupe valleys, respectively, were combined and analyzed using logistic regression. Farmer WTP is influenced by variables reflecting “present water scarcity for agricultural use”, “education and family income levels”, “partial use of wastewater for irrigation”, “water quality”, and “payment amount”. A WTP estimate of $US 0.13/m3 suggests that the environmental cost of depleting aquifers over a 20-year span could reach $US 17.4-24.9 million for the Guadalupe aquifer and $US 20.50 million for the Maneadero aquifer. This information could serve as a starting point to help decision makers in northern Mexico design more environmentally sustainable pricing policies, including investing revenues in long-term aquifer restoration.

Estimating the non-market value of island biodiversity in China: Controlling for warm glow bias in contingent valuation method

Island ecosystems have always played a leading role in conservation biology globally. However, the rich biodiversity of islands is seriously threatened by human activities. Quantifying island biodiversity in economic terms is important since it allows the benefits associated with island biodiversity to be directly compared with the economic value of alternative resource use options, which is essential in the formulation of effective policies for island biodiversity conservation. The main objective of this paper is to assess the economic value of island biodiversity on Pingtan Island, China. The contingent valuation method (CVM) was used to obtain a public willingness to pay (WTP) estimate for a policy to protect island biodiversity. To obtain a more reliable WTP estimation result, a grouped data model was used to test and correct for warm glow bias. The results demonstrate that more than half of the positive bidders are individuals who could be considered to exhibit warm glow behavior and that the warm glow effect will result in an overestimation of WTP. After endogenizing the warm glow effect, the estimated total value of marine biodiversity on Pingtan Island is 73.72 million Chinese yuan (CNY) per year. The results could provide a data basis for cost-benefit analysis, ecological restoration and other environmental management schemes related to island biodiversity.

Analysis of The Willingness to Pay Of Travelers at The Jungsemi Marine Tourism Village, Kendal Regency

The Ministry of Maritime Affairs and Fisheries oversees Marine Tourism Village, an initiative for the growth of marine tourism. One of the Maritime Tourism Villages in Kendal Regency is Jungsemi Village, which has a beach run by Village-Owned Enterprises (BUMDes) as its main draw. This study aims to estimate the Willingness to Pay (WTP) value of beach tourism entrance tickets at Jungsemi Maritime Tourism Village so that the optimum entrance ticket price will be obtained. A dichotomous choice questionnaire was employed to collect data on the socio-economic characteristics of 79 respondents who visited the beach, with the aim of determining the average WTP value. The WTP estimation results show that respondents are willing to pay a beach entrance ticket of IDR6,700 to maintain cleanliness and natural beauty, as well as the addition of comfortable tourist facilities. This is higher than the current admission price of IDR5,000 per person. Based on a simple linear regression model, it has been demonstrated that an increase in the admission fee by IDR1,000 per individual results in a decrease of 426 visitors to the tourist destination. With current conditions, this means that an extra 20% in entry ticket prices only reduces the number of visitors by 0.56%, showing that visitor demand is relatively inelastic and hence there is still room to increase entrance ticket prices.

UK general population's willingness to pay for dental check-ups.

Choices about which dental treatments to provide in a publicly funded system should be guided by the value that the general population place on those treatments. The aim of this study was to estimate United Kingdom (UK) general population willingness to pay (WTP) for dental check-ups, and to investigate what factors influence WTP. WTP was elicited using a hypothetical question in an online survey. The sample consisted of 594 participants, nationally representative of the UK general population in terms of age and gender. Regression analysis was used to examine what factors are associated with WTP. Analyses were conducted including and excluding protest answers. The mean WTP for a dental check-up is £31.32 for the full sample and £33.17 excluding protest answers. Respondents on higher incomes and those with higher university education had higher WTP. Respondents in Scotland were WTP less than respondents living in the rest of the UK which may be the result of NHS dental check-ups being free to patients in Scotland. The general UK population value dental check-ups. This study provides estimates of WTP for dental check-ups which can be used in Cost-Benefit Analyses.

Stated Preference Approach for Measuring the Perceived Benefit to Drive-Alone Users If They Switch to Park and Ride: An Indian Perspective

Park and ride facilities can be a potential instrument for addressing the rising congestion problems and ensuring sustainable urban mobility in major Indian cities, equipped with fast and excellent metro systems. The present study attempts to understand the travel behavior of commuters (four-wheeled private vehicle users only) in relation to the introduction of park and ride as a sustainable and economical alternative mode of travel to driving alone in a private vehicle in the context of Delhi, India. The present study measures the perceived benefit to drive-alone users in Delhi with regard to their willingness to pay (WTP) for switching to a better-quality park and ride service instead of using their private vehicles. Choice-based responses along with socioeconomic and travel information were collected from 559 drive-alone users using a tablet-based stated preference survey instrument. The responses were then analyzed using a multinomial logit (MNL) model. Further, WTP estimates of the noncost attributes were calculated to derive the perceived benefit to drive-alone users if they were to switch to using a park and ride service. The study also developed a generalized cost (GC) equation using the parameter and WTP estimates derived from the MNL model. Finally, the study conducted a post-estimation analysis using the GC equation to examine the influences of identified explanatory attributes on the GC for drive-alone users who switched to park and ride. “Trip length,”“parking cost,” and “parking type” exerted a significant influence on the generalized cost, indicating that drive-alone users could expect considerable savings (perceived benefit with regard to utility gain) if they were to choose park and ride.

It’s all relative: consistent marginal effects with willingness to pay and willingness to accept framing in experimental auctions

ABSTRACT When eliciting consumer preferences for controversial products – an increasing number of which exist due to increasing demographic diversity and political polarization – conventional assumptions that all individuals derive positive marginal utility from consumption are challenged. It is relatively easy to adjust hypothetical stated preference questionnaires to include negative willingness to pay (WTP), but few studies on controversial products investigate how individuals behave using incentive-compatible revealed preference techniques. Using a framed field experiment with 292 adult subjects, we fill this gap by comparing the differences and similarities between a set of results that arise from the Becker-DeGroot-Marschak (BDM) mechanism between WTP versus willingness to accept (WTA) elicitation methods. This study has two main findings. First, in economic experiments eliciting preferences for controversial products, neither the WTP nor the WTA method fully discovers the true valuation range across all participants. Second, despite framing effects that give rise to different bid distributions, relative revealed preferences for the examined products are consistent under various interventions, indicating that WTP and WTA estimates have consistent policy implications.

Estimating habit‐forming and variety‐seeking behavior: Valuation of recreational birdwatching

AbstractPast experiences influence choices, and people's preferences for more similar (habit‐forming) or different (variety‐seeking) experiences are reflected in these choices. We develop a structural estimation framework to capture whether people are habit forming or variety seeking and apply it to the choice of recreation site. This research contributes to the revealed preference literature by demonstrating how to account for habit or variety‐seeking behavior in recreation site choice models in a two‐stage framework. Using this framework, we estimate similarity weights that reflect the birders habit formation and variety seeking preferences. Predicted probabilities from the first stage model are then incorporated into the second stage, a mixed logit recreation site choice model of bird watching trips from eBird, by their members. We find that including the dynamic elements of choice, specifically variety‐seeking behavior, can double the estimated willingness to pay (WTP) for individual sites relative to the static model. Although our sample of bird watching trips taken by eBird members is a sample of convenience, these results suggest that static models of recreation site choice are a lower bound on our recreation demand WTP estimates. We find variety‐seeking preferences are related to land cover and the site's fixed attributes, whereas habit formation appears for seasonality in the bird watching context.