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Economic valuation of a contemporary art museum: correction of hypothetical bias using a certainty question

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Abstract

Biases in contingent valuation exercises are often difficult to quantify and to correct due to the hypothetical nature of the method itself. One common problem is hypothetical bias, which in recent years has been addressed in various ways, particularly through the inclusion of a certainty question in the questionnaire. We analyse the impact of applying differing corrections based on the certainty question for double-bounded dichotomous economic valuation exercises. The empirical application is based on data gathered from four surveys conducted with various groups to obtain the value allocated to a modern art museum: the Museo Patio Herreriano de Arte Contemporáneo Español, in the city of Valladolid (Spain). Findings indicate that estimates of Willingness to Pay are significantly reduced when a higher certainty threshold is required, in other words when individuals are more certain of their choices. Furthermore, correction through recoding proved more severe than correction through exclusion.

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Notes

  1. Examples include those published by Bille Hansen (1997); Santagata and Signorello (2000); Cuccia and Signorello (2002); Sanz et al. (2003); Sanz (2004); del Saz and Montagud (2005) as well as other works reflected in the book by Navrud and Ready (2002).

  2. Vossler and Kerkvliet (2003) conducted a thorough review and classification of existing works.

  3. See Brown et al. (1996); Cummings et al. (1997) and Cummings and Taylor (1999).

  4. See Neil et al. (1994); Cummings et al. (1995); Loomis et al. (1996) and List (2001).

  5. For a thorough review of this question, see Berrens et al. (2002); Samnaliev et al. (2006) and the meta-analysis on hypothetical bias conducted by List and Gallet (2001) and Murphy et al. (2005).

  6. Cheap Talk does not seem to prove effective if short (Cummings and Taylor 1999, Poe et al. 2002; Aadland and Caplan 2003 and Brown et al. 2003) and when applied to respondents lacking experience (List 2001). Recent studies advocate applying this approach with caution, Aadland and Caplan (2006) evidencing that short and neutral cheap talk may increase bias rather than reducing it. Blumenschein et al. (2008) conclude that the effectiveness of cheap talk is low in comparison to other procedures that include different levels of certainty as a means of correcting hypothetical bias.

  7. Other authors to use qualitative scales include Blumenschein et al. (1998) and Johannesson et al. (1998).

  8. The initial recommendation to be found in NOAA (1994) posits the well-known “divide by 2” rule except when real market data are known.

  9. Champ et al. (1997) use 10 as a cut-off value, Thompson et al. (2002) use 9, Champ and Bishop (2001) 8 and Poe et al. (2002) and Vossler et al. (2003) use 7.

  10. We refer to passive use values originating from cultural heritage: option value, legacy value and existence value. See Navrud and Ready (2002) and Snowball (2008).

  11. In Spain 45.6% of museums are free (See Sect. 3.13 of the Internet address http://www.mcu.es/culturabase/cgi/um?L=0&N=&O=pcaxis&M=%2Ft11%2Fp11%2Fa2002%2F).

  12. See http://www.museopatioherreriano.org.

  13. In Spain, around two-thirds of museums are public, and the remaining third private with only 2% being a combination of the two, as is our case study. Over half of the museums in Spain are free and those which are not charge a symbolic price. The entrance fee for the Museo Patio Herreriano is three euros.

  14. In other words, in the manner used for funding public goods through aliquot contributions, deemed acceptable when valuing historical heritage and museums. See Bravi et al. (2002), Sanz (2004) and Báez (2006). The specific valuation question used in our research was: “Suppose that a special fund were to be set up to help finance the conservation and maintenance costs of the Museo Patio Herreriano and its activities. Suppose also that contributions to said special fund were to be made through a single annual donation. Bearing in mind the previously described situation, would you be willing to pay X € as a contribution to this special fund for the conservation and maintenance of the Museo Patio Herreriano?”. When affirmative answers were given, a higher amount was proposed and when a negative answer was given a lower amount was proposed.

  15. For the full algorithm see An and Ayala (1996). For its application here, we used a specific Matlab program which may be consulted in Sanz (2004).

  16. Sanz et al. (2003) perform parametric, semi parametric and non-parametric estimations in several contingent valuation exercises, findings from which proved robust and similar across the different methods.

  17. The amounts proposed in the valuation question were calculated on the basis of the annual amounts paid by the most representative Friends of the Museums associations in Spain. We consulted the annual friends quotas paid for the Museo Nacional Centro de Arte Reina Sofía (65 €), Museo Nacional de Escultura (30 €), Instituto Valenciano de Arte Moderno (36 €), Museo del Prado (70 €), etc.

  18. The full range of possible answers to questions were: (1) I already contribute through my taxes, (2) Those who are most interested in such things should pay, (3) I don’t believe in this kind of contribution, (4) I’m not interested in such issues, (5) I’d like to but at the moment I can’t, (6) I prefer to give my money to other causes. As pointed out, only answers (1) and (5) were deemed real zeros, whereas the rest were interpreted as protest responses.

  19. To obtain the adjusted data we used the Consumer Price Index drawn up by the Spanish National Statistics Institute.

  20. Champ and Bishop (2001) point out that respondents who give a positive WTP with low certainty are responsible for hypothetical bias.

  21. Loomis and Ekstrand (1998) also feel that hypothetical bias is mitigated when recoding only uncertain Yes answers.

  22. The use of scales from 1 to 10 is quite common for valuation, and in other studies which employ the same scale a cut-off point of 7 has been used (Poe et al. 2002 and Vossler et al. 2003), 8 (Champ and Bishop, 2001), 9 (Thompson et al. 2002) or 10 (Champ et al. 1997).

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Authors and Affiliations

  1. Department of Financial Economy and Accounting, Escuela Universitaria de Estudios Empresariales, University of Valladolid, Paseo Prado de la Magdalena s/n, 47005, Valladolid, Spain

    Ana María Bedate

  2. Department of Applied Economics, University of Valladolid, Valladolid, Spain

    Luis César Herrero

  3. Department of Financial Economy and Accounting, University of Valladolid, Valladolid, Spain

    José Ángel Sanz

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  1. Ana María Bedate
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  2. Luis César Herrero
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Bedate, A.M., Herrero, L.C. & Sanz, J.Á. Economic valuation of a contemporary art museum: correction of hypothetical bias using a certainty question. J Cult Econ 33, 185–199 (2009). https://doi.org/10.1007/s10824-009-9098-y

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