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A mixed approach to payment certainty calibration in discrete choice welfare estimation
[journal article]
Abstract This paper provides further empirical evidence of payment uncertainty in dichotomous choice contingent valuation (CV) and proposes an alternative way of certainty calibration, moving away from conventional recoding of uncertain responses. In an international CV application, the main sources of payme... view more
This paper provides further empirical evidence of payment uncertainty in dichotomous choice contingent valuation (CV) and proposes an alternative way of certainty calibration, moving away from conventional recoding of uncertain responses. In an international CV application, the main sources of payment uncertainty are identified related to imperfect knowledge and information about the public environmental good involved, future supply levels, income constraints, price levels and the survey instrument. Together these sources of uncertainty are responsible for a third of the error variance in the estimated discrete choice model. Accounting for the heterogeneity induced by payment uncertainty in the welfare estimation procedure with the help of a mixed probit model yields a significantly lower welfare measure albeit at the expense of estimation precision.... view less
Classification
Ecology, Environment
Sociology of Economics
Free Keywords
Payment certainty calibration; Contingent Valuation; Hypothetical bias; Econometrics
Document language
English
Publication Year
2009
Page/Pages
36 p.
Journal
Applied Economics (2009)
DOI
https://doi.org/10.1080/00036840903035977
Status
Postprint; peer reviewed
Licence
PEER Licence Agreement (applicable only to documents from PEER project)