Article

Environmental and Resource Economics

, Volume 39, Issue 4, pp 481-495

Cognitive ability and scale bias in the contingent valuation method

An analysis of willingness to pay to reduce mortality risk
  • Henrik AnderssonAffiliated withDepartment of Transport Economics, Swedish National Road and Transport Research Institute (VTI) Email author 
  • , Mikael SvenssonAffiliated withDepartment of Business, Economics, Statistics and Informatics, Örebro University

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Abstract

This study investigates whether or not the scale bias found in contingent valuation (CVM) studies on mortality risk reductions is a result of cognitive constraints among respondents. Scale bias refers to insensitivity and non-near-proportionality of the respondents’ willingness to pay (WTP) to the size of the risk reduction. Two hundred Swedish students participated in an experiment in which their cognitive ability was tested before they took part in a CVM-study asking them about their WTP to reduce bus-mortality risk. The results imply that WTP answers from respondents with a higher cognitive ability are less flawed by scale bias.

Keywords

Cognitive ability Contingent valuation Mortality risk Near-proportionality Scale bias

JEL Codes

D80 I10 Q51