Environmental and Resource Economics

, Volume 34, Issue 1, pp 125–162 | Cite as

Experimental Evidence on Alternative Environmental Valuation Methods



Experimental methods are central to assessments of environmental valuation approaches that are operationally meaningful. Existing lab experiments focus attention sharply on the neglect of hypothetical bias. They also offer constructive solutions to correct this bias, and beg for validation in field experiments.


experiments valuation hypothetical bias 


Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.


  1. Aadland, D., Caplan, A. J. 2003‘Willingness to Pay for Curbside Recycling with Detection and Mitigation of Hypothetical Bias’American Journal of Agricultural Economics85492502CrossRefGoogle Scholar
  2. Adamowicz, W., Louviere, J., Williams, M. 1994‘Combining Stated and Revealed Preference Methods for Valuing Environmental Amenities’Journal of Environmental Economics and Management26271292CrossRefGoogle Scholar
  3. Afriat, S. 1967‘The Construction of a Utility Function from Expenditure Data’International Economic Review86777CrossRefGoogle Scholar
  4. Arrow, K., Solow, R., Portney, P., Leamer, E. E., Radner, R., Schuman, H. 1993‘Report of the NOAA Panel on Contingent Valuation’Federal Register5846024614January 15Google Scholar
  5. Blackburn, M., Harrison, G. W., Rutström, E. E. 1994‘Statistical Bias Functions and Informative Hypothetical Surveys’American Journal of Agricultural Economics7610841088CrossRefGoogle Scholar
  6. Blumenschein, K., Johannesson, M., Blomquist, G. C., Liljas, B., O’Coner, R. M. 1998‘Experimental Results on Expressed Certainty and Hypothetical Bias in Contingent Valuation’Southern Economic Journal65169177CrossRefGoogle Scholar
  7. Blumenschein, K., Johanneson, M., Yokoyama, K. K., Freeman, P. R. 2001‘Hypothetical Versus Real Willingness to Pay in the Health Care Sector: Results from a Field Experiment’Journal of Health Economics20441457CrossRefGoogle Scholar
  8. Bohm, P., Lindén, J., Sonnegård, J. 1997‘Reservation Prices: Becker-DeGroot-Marschak Mechanisms vs. Markets’Economic Journal10710791089CrossRefGoogle Scholar
  9. Boyce, R. R., Brown, T. C., McClelland, G. H., Peterson, G., Schulze, W. D. 1989

    ‘Experimental Evidence of Existence Value in Payment and Compensation Contexts’

    Boyle, K. J.Heekin, T. eds. Western Regional Research Project W-133: Benefits and Costs in Natural Resources Planning, Interim Report 2Department of Agricultural and Resource Economics University of MaineOronoJuly 1
    Google Scholar
  10. Brown, T. C., Ajzen, I., Hrubes, D. 2003‘Further Tests of Entreaties to Avoid Hypothetical Bias in Referendum Contingent Valuation’Journal of Environmental Economics and Management46353361CrossRefGoogle Scholar
  11. Cameron, T. A., Poe, G. L., Ethier, R. G., Schulze, W. D. 2002‘Alternative Non-market Value-Elicitation Methods: Are the Underlying Preferences the Same?’Journal of Environmental Economics and Management44391425CrossRefGoogle Scholar
  12. Carlsson, F., Martinsson, P. 2001‘Do Hypothetical and Actual Marginal Willingness to Pay Differ in Choice Experiments?’Journal of Environmental Economics and Management41179192CrossRefGoogle Scholar
  13. Carson, R. T. (1991), ‘Constructed Markets’, in J. B. Braden and C. K. Kolstad, eds., Measuring the Demand for Environmental Quality. Amsterdam: North-Holland.Google Scholar
  14. Carson, R. T., W. M. Hanemann, J. A. Krosnick, R. C. Mitchell, S. Presser, P. A. Ruud and V. K. Smith (1998), ‘Referendum Design and Contingent Valuation: The NOAA Panel’s No-Vote Recommendation’, Review of Economics and Statistics 80(2), 335–338 (Reprinted with typographical corrections in Review of Economics and Statistics, 80(3))Google Scholar
  15. Carson, R. T., R. C. Mitchell, W. M. Hanemann, R. J. Kopp, S. Presser and P. A. Ruud (1992), A Contingent Valuation Study of Lost Passive Use Values Resulting From the Exxon Valdez Oil Spill. Anchorage: Attorney General of the State of AlaskaGoogle Scholar
  16. Coller, M., Williams, M. B. 1999‘Eliciting Individual Discount Rates’Experimental Economics2107127Google Scholar
  17. Cummings, R. G., Elliott, S., Harrison, G. W., Murphy, J. 1997‘Are Hypothetical Referenda Incentive Compatible?’Journal of Political Economy105609621CrossRefGoogle Scholar
  18. Cummings, R. G., Harrison, G. W. 1994‘Was the Ohio Court Well Informed in Their Assessment of the Accuracy of the Contingent Valuation Method?’Natural Resources Journal34136WinterGoogle Scholar
  19. Cummings, R. G., G. W. Harrison and L. L. Osborne (1995a), ‘Can the Bias of Contingent Valuation Be Reduced? Evidence from the Laboratory’, Economics Working Paper B-95-03, Division of Research, College of Business Administration, University of South Carolina (see http://www.bus.ucf.edu/gharrison/wp/)
  20. Cummings, R. G., G. W. Harrison and L. L. Osborne (1995b), ‘Are Realistic Referenda Real?’ Economics Working Paper B-95-06, Division of Research, College of Business Administration, University of South Carolina (see http://www.bus.ucf.edu/gharrison/wp/)
  21. Cummings, R. G., Harrison, G. W., Rutström, E. E. 1995c‘Homegrown Values and Hypothetical Surveys: Is the Dichotomous Choice Approach Incentive Compatible?’American Economic Review85260266Google Scholar
  22. Cummings, R. G., Taylor, L. O. 1998‘Does Realism Matter in Contingent Valuation Surveys?’Land Economics74203215CrossRefGoogle Scholar
  23. Cummings, R. G., Taylor, L. O. 1999‘Unbiased Value Estimates for Environmental Goods: A Cheap Talk Design for the Contingent Valuation Method’American Economic Review89649665CrossRefGoogle Scholar
  24. Dillman, D. A. 1978Mail and Telephone Surveys: The Total Design MethodWileyNew YorkGoogle Scholar
  25. Fischoff, B. 1991‘Value Elicitation. Is there Anything in There?’American Psychologist46835847CrossRefGoogle Scholar
  26. Fischoff, B., Furby, L. 1988‘Measuring Values: A Conceptual Framework for Interpreting Transactions with Special Reference to Contingent Valuations of Visibility’Journal of Risk and Uncertainty1147184CrossRefGoogle Scholar
  27. Fox, J. A., Shogren, J. F., Hayes, D. J., Kliebenstein, J. B. 1998‘CVM-X: Calibrating Contingent Values with Experimental Auction Markets’American Journal of Agricultural Economics80455465CrossRefGoogle Scholar
  28. Freeman, A. M.,III 1979The Benefits of Environmental ImprovementJohns Hopkins PressBaltimoreGoogle Scholar
  29. Haab, T. C., Huang, J.-C., Whitehead, J. C. 1999‘Are Hypothetical Referenda Incentive Compatible? A Comment’Journal of Political Economy107186196CrossRefGoogle Scholar
  30. Harrison, G. W. 1992‘Theory and Misbehavior of First-Price Auctions: Reply’American Economic Review8214261443DecemberGoogle Scholar
  31. Harrison, G. W., Beekman, R. L., Brown, L. B., Clements, L. A., McDaniel, T. M., Odom, S. L., Williams, M. 1999

    ‘Environmental Damage Assessment With Hypothetical Surveys: The Calibration Approach’

    Boman, M.Brännlund, R.Kriström, B. eds. Topics in Environmental EconomicsKluwer Academic PressAmsterdam
    Google Scholar
  32. Harrison, G. W., Harstad, R. M., Rutström, E. E. 2004‘Experimental Methods and Elicitation of Values’Experimental Economics7123140CrossRefGoogle Scholar
  33. Harrison, G. W., Lau, M. I., Williams, M. B. 2002‘Estimating Individual Discount Rates for Denmark: A Field Experiment’American Economic Review9216061617CrossRefGoogle Scholar
  34. Harrison, G. W., Lau, M. I., Rutström, E. E., Sullivan, M. B. 2005

    ‘Eliciting Risk and Time Preferences Using Field Experiments: Some Methodological Issues’

    Carpenter, J.Harrison, G. W.List, J. A. eds. Field Experiments in EconomicsJAI Press, Research in Experimental EconomicsGreenwich, CT
    Google Scholar
  35. Harrison, G. W., Lesley, J. C. 1996‘Must Contingent Valuation Surveys Cost So Much?’Journal of Environmental Economics and Management317995CrossRefGoogle Scholar
  36. Harrison, G. W., List, J. A. 2004‘Field Experiments’Journal of Economic Literature4210131059CrossRefGoogle Scholar
  37. Harrison, G. W. and E. E. Rutström (2005), ‘Experimental Evidence on the Existence of Hypothetical Bias in Value Elicitation Methods’, in C. R. Plott and V. L. Smith, eds., Handbook of Experimental Economics Results. North-Holland: AmsterdamGoogle Scholar
  38. Harstad, R. M. 2000‘Dominant Strategy Adoption and Bidders’ Experience with Pricing Rules’Experimental Economics3261280Google Scholar
  39. Hayes, D. J., Shogren, J., Shin, S. Y., Kliebenstein, J. B. 1995‘Valuing Food Safety in Experimental Auction Markets’American Journal of Agricultural Economics774053CrossRefGoogle Scholar
  40. Hensher, D., Louviere, J., Swait, J. D. 1999‘Combining Sources of Preference Data’Journal of Econometrics89197221CrossRefGoogle Scholar
  41. Hey, J. D. 1995‘Experimental Investigations of Errors in Decision Making Under Risk’European Economic Review39633640CrossRefGoogle Scholar
  42. Hoffman, E., Menkhaus, D. J., Chakravarti, D., Field, R. A., Whipple, G. D. 1993‘Using Laboratory Experimental Auctions in Marketing Research: A Case Study of New Packaging for Fresh Beef’Marketing Science12318338SummerCrossRefGoogle Scholar
  43. Holt, C. A., Laury, S. K. 2002‘Risk Aversion and Incentive Effects’American Economic Review9216441655CrossRefGoogle Scholar
  44. Horowitz, J. K. (1991), ‘Discounting Money Payoffs: An Experimental Analysis’, Handbook of Behavioral Economics. Greenwich, CT: JAI Press, Inc., v. 2B, pp. 309–324Google Scholar
  45. Imber, D., Stevenson, G., Wilks, L. 1991A Contingent Valuation Survey of the Kakadu Conservation ZoneAustralian Government Publishing Service for the Resource Assessment CommissionCanberraGoogle Scholar
  46. Johannesson, M., Blomquist, G. C., Blumenschein, K., Johansson, P.-O., Liljas, B., O’Conner,  R. M. 1999‘Calibrating Hypothetical Willingness to Pay Responses’Journal of Risk and Uncertainty82132CrossRefGoogle Scholar
  47. Kahneman, D., Knetsch, J. L., Thaler, R. H. 1990‘Experimental Tests of the Endowment Effect and the Coase Theorem’Journal of Political Economy9813251348DecemberCrossRefGoogle Scholar
  48. Kagel, J. H., Harstad, R. M., Levin, D. 1987‘Information Impact and Allocation Rules in Auctions with Affiliated Private Values: A Laboratory Study’Econometrica5512751304CrossRefGoogle Scholar
  49. Krosnick, J. A., Holbrook, A. L., Berent, M. K., Carson, R. T., Hanemann, W. M., Kopp, R. J., Mitchell, R. C., Presser, S., Ruud, P. A., Smith, V. K., Moody, W. R., Green, M. C., Conaway,  M. 2002‘The Impact of ‘No Opinion’ Response Options on Data Quality: Non-Attitude Reduction or an Invitation to Satisfice?’Public Opinion Quarterly66371403CrossRefGoogle Scholar
  50. Kurz, M. 1974‘Experimental Approach to the Determination of the Demand for Public Goods’Journal of Public Economics3329348CrossRefGoogle Scholar
  51. List, J. A. 2001‘Do Explicit Warnings Eliminate the Hypothetical Bias in Elicitation Procedures? Evidence from Field Auctions for Sportscards’American Economic Review9114981507CrossRefGoogle Scholar
  52. List, J. A., Berrens, R. P., Bohara, A. K., Kerkvliet, J. 2004‘Examining the Role of Social Isolation on Stated Preferences’American Economic Review94741752CrossRefGoogle Scholar
  53. List, J. A., Shogren, J. F. 1998‘Calibration of the Differences Between Actual and Hypothetical Valuations in a Field Experiment’Journal of Economic Behavior and Organization37193205CrossRefGoogle Scholar
  54. List, J. A., Shogren, J. F. 1999‘Price Signals and Bidding Behavior in Second-Price Auctions with Repeated Trials’American Journal of Agricultural Economics81942929CrossRefGoogle Scholar
  55. List, J. A., Shogren, J. F. 2002‘Calibration of Willingness-to-Accept’Journal of Environmental Economics and Management43219233CrossRefGoogle Scholar
  56. Loomes, G., Starmer, C., Sugden, R. 2003‘Do Anomalies Disappear in Repeated Markets?’Economic Journal113C153C166CrossRefGoogle Scholar
  57. Loomis, J., Brown, T., Lucero, B., Peterson, G. 1996‘Improving Validity Experiments of Contingent Valuation Methods: Results of Efforts to Reduce the Disparity of Hypothetical and Actual Willingness to Pay’Land Economics72450461CrossRefGoogle Scholar
  58. Loomis, J., Gonzalez-Caban, A., Gregory, R. 1994‘Do Reminders of Substitutes and Budget Constraints Influence Contingent Valuation Estimates?’Land Economics70499506CrossRefGoogle Scholar
  59. Louviere, J. J., Hensher, D. A., Swait, J. D. 2000Stated Choice Methods: Analysis and ApplicationCambridge University PressNew YorkGoogle Scholar
  60. Lusk, J. L., Schroeder, T. C. 2004‘Are Choice Experiments Incentive Compatible? A Test with Quality Differentiated Beef Steaks’American Journal of Agricultural Economics86467482CrossRefGoogle Scholar
  61. McClelland, G., W. Schulze, D. Waldman, J. Irwin and D. Schenk (1991), ‘Sources of Error in Contingent Valuation’, Unpublished Manuscript, Department of Economics, University of Colorado at BoulderGoogle Scholar
  62. Milgrom, P. R., Weber, R. J. 1982‘A Theory of Auctions and Competitive Bidding’Econometrica5010891122CrossRefGoogle Scholar
  63. Mitchell, R. C., Carson, R. T. 1989Using Surveys to Value Public Goods: The Contingent Valuation MethodJohns Hopkins PressBaltimoreGoogle Scholar
  64. Murphy, J. J., T. Stevens and D. Weatherhead (2003), ‘An Empirical Study of Hypothetical Bias in Voluntary Contribution Contingent Valuation: Does Cheap Talk Matter?’, Unpublished Manuscript, Department of Resource Economics, University of MassachusettsGoogle Scholar
  65. Nape, S. W., Frykblom, P., Harrison, G. W., Lesley, J. C. 2003‘Hypothetical Bias and Willingness to Accept’Economic Letters78423430CrossRefGoogle Scholar
  66. National Oceanic and Atmospheric Administration (1992), ‘Contingent Valuation Panel, Public Meeting, Wednesday, August 12, 1992’, Certified Official Transcript, 283 pp. plus attachments, Department of Commerce, Washington, DCGoogle Scholar
  67. National Oceanographic and Atmospheric Administration (1994a), ‘Proposed Rules for Valuing Environmental Damages’, Federal Register 59(5), 1062–1191Google Scholar
  68. National Oceanic and Atmospheric Administration (1994b), ‘Natural Resource Damage Assessments; Proposed Rules’, Federal Register 59(85) (Part II)Google Scholar
  69. Neill, H. R., Cummings, R. G., Ganderton, P. T., Harrison, G. W., McGuckin, T. 1994‘Hypothetical Surveys, Provision Rules and Real Economic Commitments’Land Economics70145154CrossRefGoogle Scholar
  70. Rowe, R. D., W. D. Schulze, W. D. Shaw, D. Schenk and L. G. Chestnut (1991), ‘Contingent Valuation of Natural Resource Damage Due to the Nestucca Oil Spill’, Final Report RCG/Hagler, Bailly, Inc., BoulderGoogle Scholar
  71. Rutström, E. E. 1998‘Home-Grown Values and the Design of Incentive Compatible Auctions’International Journal of Game Theory27427441CrossRefGoogle Scholar
  72. Samuelson, P. A. 1938‘A Note on the Pure Theory of Consumer’s Behavior’Economica56171CrossRefGoogle Scholar
  73. Schkade, D. A. and J. W. Payne (1993), ‘Where Do the Numbers Come From? How People Respond to Contingent Valuation Questions’, in J. Hausman, ed., Contingent Valuation: A Critical Appraisal. Amsterdam: North-HollandGoogle Scholar
  74. Shogren, J. F. (2004), ‘Experimental Methods and Valuation’, in K.-G. Mäler and J. Vincent, eds., Handbook of Environmental Economics. Volume 2: Valuing Environmental Changes. Amsterdam: North-HollandGoogle Scholar
  75. Shogren, J. F., Shin, S. Y., Hayes, D. J., Kliebenstein, J. B. 1994‘Resolving Differences in Willingness to Pay and Willingness to Accept’American Economic Review84255270Google Scholar
  76. Smith, V. K. 1990‘Can We Measure the Economic Value of Environmental Amenities?’Southern Economic Journal56865887CrossRefGoogle Scholar
  77. Smith, V. K. 1992‘Arbitrary Values, Good Causes, and Premature Verdicts’Journal of Environmental Economics and Management227189CrossRefGoogle Scholar
  78. Smith, V. L. 1982‘Microeconomic Systems as an Experimental Science’American Economic Review72923955Google Scholar
  79. Svedsäter, H. and O. Johansson-Stenman (2001), ‘Choice Experiments and Self Image: Hypothetical and Actual Willingness To Pay’, Unpublished Manuscript, Department of Economics, Gothenburg UniversityGoogle Scholar
  80. Swait, J., Louviere, J. 1993‘The Role of the Scale Parameter in the Estimation and Comparison of Multinomial Logit Models’Journal of Marketing Research30305314CrossRefGoogle Scholar
  81. Varian, H. R. 1982‘The Nonparametric Approach to Demand Analysis’Econometrica50945973CrossRefGoogle Scholar
  82. Varian, H. R. 1983‘Non-Parametric Tests of Consumer Behavior’Review of Economic Studies5099110CrossRefGoogle Scholar

Copyright information

© Springer 2006

Authors and Affiliations

  1. 1.Department of Economics, College of Business AdministrationUniversity of Central FloridaOrlandoUSA

Personalised recommendations