Skip to main content
SpringerLink
Log in

Mitigating hypothetical bias in willingness to pay studies: post-estimation uncertainty and anchoring on irrelevant information

  • Original Paper
  • Published:
The European Journal of Health Economics Aims and scope Submit manuscript

Abstract

One possible source of hypothetical bias in willingness to pay (WTP) estimates is response uncertainty, referring to subject’s uncertainty about the value of the good under assessment. It has been argued that uncertainty can be measured using the post-valuation ‘certainty question’ that asks: ‘How certain are you about your stated WTP?’ and marks the degree of certainty on a quantitative or a qualitative scale. Research has shown that the self-reported certainty evaluations can help mitigate hypothetical bias and obtain increasingly accurate WTP estimates. These study reports present a simple test of reliability of post-valuation certainty assessment and then looks at the empirical evidence for clues regarding the general usefulness of certainty adjustment in mitigating hypothetical bias in WTP studies. We find that the post-estimation uncertainty scores are malleable, i.e., significantly correlated with entirely irrelevant information. We conclude that more robust evidence could justify the routine inclusion of certainty evaluation in WTP studies although in the meantime the interpretation of certainty-adjusted WTP values should be approached cautiously.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1

Similar content being viewed by others

Notes

  1. For instance, True WTP = Stated WTP / Bias, where Bias = f(uncertainty), e.g., 1.5 < Bias < 4.

  2. Informed consent form was designed according to the official guidelines of the Medical faculty, University Rijeka. Ethics committee provided approval for study design.

  3. These estimates were reasonable when compared to hourly wage rates in Croatia; they will be reported in another paper, as yet unpublished.

  4. Since most chronic kidney disease patients’ stages III and IV will need dialysis in the future, they are familiar with specificities of dialysis treatment (including the treatment time required). However, familiarity with the good does not imply being familiar with paying for the good and payment mechanisms have been shown to affect WTP estimates as well.

References

  1. Akter, S., Bennett, J., Akhter, S.: Preference uncertainty in contingent valuation. Ecol. Econ. 67(3), 345–351 (2008)

    Article  Google Scholar 

  2. Ariely, D., Prelec, D., Loewenstein, G.: “Coherent arbitrariness”: stable demand curves without stable preferences: stable demand curves without stable preferences. Quat. J. Econ. 118(1), 73 (2003)

    Article  Google Scholar 

  3. Arrow, K., Solow, R.: 1993. Report of the NOAA panel on contingent valuation. National Oceanic and Atmospheric Administration. 1993. Report of the NOAA Panel on Contingent Valuation. 58 Federal Register (4602-14)

  4. Bedate, A.M., Herrero, L.C., Sanz, J.A.: Economic valuation of a contemporary art museum: correction of hypothetical bias using a certainty question. J. Cult. Econ. 33(3), 185–199 (2009)

    Article  Google Scholar 

  5. Bergman, O., Ellingsen, T., Johannesson, M., Svensson, C.: Anchoring and cognitive ability. Econ. Lett. 107(1):66–8 (2010)

    Article  Google Scholar 

  6. Berrens, R.P., Jenkins-Smith, H., Bohara, A.K., Silva, C.L.: Further investigation of voluntary contribution contingent valuation: fair share, time of contribution, and respondent uncertainty. J. Environ. Econ. Manag. 44(1), 144–168 (2002)

    Article  Google Scholar 

  7. Blomquist, G.C., Blumenschein, K., Johannesson, M.: Eliciting willingness to pay without bias using follow-up certainty statements: comparisons between probably/definitely and a 10-point certainty scale. Environ. Resour. Econ. 43(4), 473–502 (2009)

    Article  Google Scholar 

  8. Blumenschein, K., Blomquist, G.C., Johannesson, M., Horn, N., Freeman, P.: Eliciting willingness to pay without bias: evidence from a field experiment. Econ. J. 118(525), 114–137 (2008)

    Article  Google Scholar 

  9. Blumenschein, K., Johannesson, M., Blomquist, G.C., Liljas, B., O’Conor, R.M.: (1998). Experimental results on expressed certainty and hypothetical bias in contingent valuation. South. Econ. J., 169–177

  10. Bobinac, A., van Exel, J., Frans, F.H., Rutten, Werner, B.F., Brouwer: The value of a QALY: individual willingness to pay for health gains under risk. Pharmacoeconomics 32(1), 75–86 (2014)

    Article  PubMed  Google Scholar 

  11. Boyle, K.J., Desvousges, W.H., Johnsonm, F.R., Dunford, R.W., Hudson, S.: An Investigation of Part-Whole Biases in Contingent Valuation Studies. J. Environ. Econ. Manag. 27, 64–83 (1994)

    Article  Google Scholar 

  12. Boyle, K.J., Johnson, F.R., McCollum, D.W., Desvousges, W.H., Dunford, R.W., Hudson, S.P.: Valuing public goods: Discrete versus continuous contingent valuation responses. Land Econ 72(3), 267–286 (1993)

    Google Scholar 

  13. Cameron, T., Englin, J.: Welfare effects of changes in environmental quality under individual uncertainty about use. The RAND J. Econ. 28, S45–S70 (1997)

    Article  Google Scholar 

  14. Carson, R.T., Nicholas, E., Flores, Norman, F., Meade: Contingent valuation: controversies and evidence. Environ. Resour. Econ. 19.2, 173–210 (2001)

    Article  Google Scholar 

  15. Champ, P.A., Bishop, R.C.: Donation payment mechanisms and contingent valuation: an empirical study of hypothetical bias. Environ. Resour. Econ. 19(4), 383–402 (2001)

    Article  Google Scholar 

  16. Champ, P.A., Moore, R., Bishop, R.C.: A comparison of approaches to mitigate hypothetical bias. Agric. Resour. Econ. Rev. 38(2), 166 (2009)

    Article  Google Scholar 

  17. Champ, P.A., Bishop, R.C., Brown, T.C., McCollum, D.W.: (1997). Using donation mechanisms to value nonuse benefits from public goods. J. Environ. Econ. Manag. 33(2)

  18. Diamond, P.A., Hausman, J.A.: On contingent valuation measurement of nonuse values. In: Hausman JA (ed) Contingent Valuation: A Critical Assessment (Contributions to Economic Analysis, vol 220. Emerald Group Publishing Limited, pp 3–38 (1993)

  19. Donaldson, C., Baker, R., Mason, H., Jones-Lee, M., Lancsar, E., Wildman, J., Bateman, I., Loomes, G., Robinson, A., Sugden, R., Pinto Prades, J.L., Ryan, M., Shackley, P., Smith, R.: The social value of a QALY: raising the bar or barring the raise? BMC Health Serv. Res. 11, 8 (2011)

    Article  PubMed  PubMed Central  Google Scholar 

  20. Ethier, R.G., Poe, G.L., Schulze, W.D., Clark, J.: A comparison of hypothetical phone and mail contingent valuation responses for green-pricing electricity programs. Land Econ. 76(1), 54–67 (2000)

    Article  Google Scholar 

  21. Fox, J.A., Shogren, J.F., Hayes, D.J., Kliebenstein, J.B.: CVM-X: calibrating contingent values with experimental auction markets. Am. J. Agr. Econ. 80(3), 455–465 (1998)

    Article  Google Scholar 

  22. Hultkrantz, L., Lindberg, G., Andersson, C.: The value of improved road safety. J. Risk Uncertain. 32(2), 151–170 (2006)

    Article  Google Scholar 

  23. Johannesson, M., Blomquist, G.C., Blumenschein, K., Johansson, P.O., Liljas, B., O’Conor, R.M.: Calibrating hypothetical willingness to pay responses. J. Uncertain. 18(1), 21–32 (1999)

    Article  Google Scholar 

  24. Johannesson, M., Meltzer, D.: Editorial: Some reflections on cost-effectiveness analysis. Health Econ. 7.1, 1–7 (1998)

    Article  Google Scholar 

  25. Johnson, F.: Reed, et al.: Role of knowledge in assessing nonuse values for natural resource damages. Growth and Change 32(2001), 43–68 (2001)

    Article  Google Scholar 

  26. King, J.T., Tsevat, J., Lave, J.R., Roberts, M.S.: Willingness to pay for a quality-adjusted life year: implications for societal health care resource allocation. Med. Decis. Making 25(6), 667–677 (2005)

    Article  PubMed  Google Scholar 

  27. Kosenius, A.-K.: Causes of response uncertainty and its implications for WTP estimation in choice experiments. Discuss. Papers 29 (2009)

  28. Li, C.Z., Mattsson, L.: Discrete choice under preference uncertainty: an improved structural model for contingent valuation. J. Environ. Econ. Manag. 28(2), 256–269 (1995)

    Article  Google Scholar 

  29. List, J.A., Gallet, C.A.: What experimental protocol influence disparities between actual and hypothetical stated values? Environ. Resour. Econ. 20(3), 241–254 (2001)

    Article  Google Scholar 

  30. List, J.A., Shogren, J.F.: Calibration of the difference between actual and hypothetical valuations in a field experiment. J. Econ. Behav. Organ. 37(2), 193–205 (1998)

    Article  Google Scholar 

  31. Little, J., Berrens, R.: Explaining disparities between actual and hypothetical stated values: further investigation using meta-analysis. Econ. Bull. 3(6), 1–13 (2004)

    Google Scholar 

  32. Loomis, J., Ekstrand, E.: Alternative approaches for incorporating respondent uncertainty when estimating willingness to pay: the case of the Mexican spotted owl. Ecol. Econ. 27(1), 29–41 (1998)

    Article  Google Scholar 

  33. Mansfield, C.: (1998). A consistent method for calibrating contingent value survey data. South. Econ. J., 665–681

  34. Morrison, M., Brown, T.C.: Testing the effectiveness of certainty scales, cheap talk, and dissonance-minimization in reducing hypothetical bias in contingent valuation studies. Environ. Resour. Econ. 44(3), 307–326 (2009)

    Article  Google Scholar 

  35. Murphy, J.J., Allen, P.G., Stevens, T.H., Weatherhead, D.: A meta-analysis of hypothetical bias in stated preference valuation. Environ. Resour. Econ. 30(3), 313–325 (2005)

    Article  Google Scholar 

  36. Norwood, F.B.: Can calibration reconcile stated and observed preferences? J. Agric. Appl. Econ. 37(01), 237–248 (2005)

    Article  Google Scholar 

  37. Norwood, F.B., Lusk, J.L., Boyer, T.: Forecasting hypothetical bias: a tale of two calibrations. In: Cherry, T.L., Kroll, S., Shogren, J.F. (eds.) Environmental economics, experimental methods. Routledge, New York (2008)

    Google Scholar 

  38. Nunes, J.C., Boatwright, P.: Incidental prices and their effect on willingness to pay. J. Mark. Res. 41(4), 457–466 (2004)

    Article  Google Scholar 

  39. Opaluch, J.J., Segerson, K.: Rational roots of ‘irrational’ behavior: new theories of economic decision-making. Northeast. J. Agric. Resour. Econ. 18(2), 81–95 (1989)

    Article  Google Scholar 

  40. Poe, G.L., Clark, J.E., Rondeau, D., Schulze, W.D.: Provision Point Mechanisms and Field Validity Tests of Contingent Valuation. Environ. Res. Econ. 23(1), 105–31 (2002)

    Article  Google Scholar 

  41. Robinson, A., Gyrd-Hansen, D., Bacon, P., Baker, R., Pennington, M., Donaldson, C.: Estimating a WTP-based value of a QALY: The ‘chained’approach. Soc. Sci. Med. 92, 92–104 (2013)

    Article  PubMed  Google Scholar 

  42. Samnaliev, M., Stevens, T.H., More, T.: A comparison of alternative certainty calibration techniques in contingent valuation. Ecol. Econ. 57(3), 507–519 (2006)

    Article  Google Scholar 

  43. Shaikh, S.L., Sun, L., van Kooten, G.C.: Treating respondent uncertainty in contingent valuation: a comparison of empirical treatments. Ecol. Econ. 62(1), 115–125 (2007)

    Article  Google Scholar 

  44. Simonson, I., Drolet, A.: Anchoring effects on consumers’ willingness-to-pay and willingness-to-accept. J. Consum. Res. 31(3), 681–690 (2004)

    Article  Google Scholar 

  45. Svensson, M.: The value of a statistical life in Sweden: estimates from two studies using the “Certainty Approach” calibration. Accid. Anal. Prev. 41(3), 430–437 (2009)

    Article  PubMed  Google Scholar 

  46. van den Berg, B., Gafni, A., Portrait, F.: Attributing a monetary value to patients’ time: A contingent valuation approach. Soc. Sci. Med. 179, 182–190 (2017)

    Article  PubMed  Google Scholar 

  47. Vossler, C.A., Kerkvliet, J.: A criterion validity test of the contingent valuation method: comparing hypothetical and actual voting behavior for a public referendum. J. Environ. Econ. Manag. 45(3), 631–649 (2003)

    Article  Google Scholar 

  48. Vossler, C.A., McKee, M.: Induced-value tests of contingent valuation elicitation mechanisms. Environ. Resour. Econ. 35(2), 137–168 (2006)

    Article  Google Scholar 

  49. Vossler, C.A., Ethier, R.G., Poe, G.L., Welsh, M.P.: (2003). Payment certainty in discrete choice contingent valuation responses: results from a field validity test. South. Econ. J., 886–902

  50. Whitehead, J.C.: Willingness to pay for quality improvements: comparative statics and theoretical interpretations of contingent valuation results. Land. Econ. 71, 207–215 (1995)

    Article  Google Scholar 

  51. Whynes, D.K., Frew, E., Wolstenholme, J.L.: A comparison of two methods for eliciting contingent valuations of colorectal cancer screening. J. Health Econ. 22(4), 555–574 (2003)

    Article  PubMed  Google Scholar 

Download references

Acknowledgements

This work is part of the research program VENI (grant number 451-13-006), which is (partly) financed by the Netherlands Organization for Scientific Research (NWO). The researcher was free in study design, data collection, analysis and interpretation, as well as writing and submitting the manuscript for publication. The views expressed in this paper are those of the author.

Author information

Authors and Affiliations

  1. Medical Faculty, University of Rijeka, B. Branchetta 12, 51000, Rijeka, Croatia

    Ana Bobinac

Authors
  1. Ana Bobinac
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Ana Bobinac.

Appendix

Appendix

The hypothetical WTP question offered to the test group, translated from Croatian to English:

Although the content of this question is hypothetical, we greatly appreciate your answer.

If I were you, I would thoroughly consider the following question and provide an answer as if this was an actual situation and an actual service on offer, requiring an actual payment. I would ask myself how much is this service worth to me and only if it was worth something, I would say how much. I would answer the following question as it was an actual dilemma I face.

When you answer the following question, please take your personal and household net monthly income into account.

Now please imagine you are a patient in need of dialysis. Imagine that a new and more effective method of dialysis is available. The new technology will shorten the time spent on dialysis from 4 h to 1 h. The dialysis will still be undertaken at the Nephrology department in Rijeka, 3 times a week. However, instead of 12 h a week (4 × 3), the new method will allow the patient to spend 3 h a week on dialysis (1 × 3).

Would you be willing to undergo this equally effective but shorter dialysis treatment? In all other aspects, the new method is as safe and clinically effective.

  • Yes

  • No

Unfortunately, HZZO* will not pay the costs of the new dialysis treatment for any of its patients. If you want to use it, you will need to pay for the new dialysis treatment yourself. Payments for 1 year of dialysis can be made in 12 monthly installments, starting tomorrow (i.e., you need to pay monthly for using the new technology, during a single year). Other patients will be able to use the new method of dialysis only if they also pay for it, otherwise they will continue using the traditional method.

Would you be willing to pay for this new method of dialysis that will bring you a reduction in treatment time, out-of-pocket?

  • Yes

  • No

How much would you be willing to pay out of pocket for the new method of dialysis?

I am willing to pay _______________ kn** for the shorter dialysis, for a period of 1 year, in 12 monthly installments. Please consider that the total amount you want to pay for the new dialysis method equals 12 times the amount you state.

How certain are you that you would pay the stated amount, if asked to do so right now (please circle the number on the scale)?

figure a

*Croatian national health insurer.

**kn = Kuna, Croatian national currency.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Bobinac, A. Mitigating hypothetical bias in willingness to pay studies: post-estimation uncertainty and anchoring on irrelevant information. Eur J Health Econ 20, 75–82 (2019). https://doi.org/10.1007/s10198-018-0983-1

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10198-018-0983-1

Keywords

JEL Classifications

Search

Navigation