Advertisement

Environmental and Resource Economics

, Volume 19, Issue 4, pp 383–402 | Cite as

Donation Payment Mechanisms and Contingent Valuation: An Empirical Study of Hypothetical Bias

  • Patricia A. Champ
  • Richard C. Bishop
Article

Abstract

Donation payment mechanisms are well suited forsome contingent valuation studies. In aneffort to better understand the discrepancythat has been consistently found between actualand hypothetical donations, we investigate anapproach to estimating actual willingness todonate using contingent donations with afollow-up question in which respondents ratethe level of certainty about their response tothe contingent donation question. The approachallows us to estimate the magnitude of thehypothetical bias and identify the respondentsresponsible for the bias. Identification ofthe respondents responsible for thehypothetical bias is the first step towarddeveloping an understanding of the causes andpossible remedies. In this study we find thatmost of the respondents (80%) to thecontingent donation question provide a responseconsistent with how we predict they wouldrespond in an actual donation situation.

actual donations calibration contingent donations contingent valuation hypothetical bias uncertainty 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

REFERENCES

  1. Bateman, I. J., I. H. Langford, K. G. Willis, R. K. Turner and G. D. Garrod (1993), ‘The Impacts of Changing Willingness to Pay Question Format in Contingent Valuation Studies: An Analysis of Open-Ended, Iterative Bidding and Dichotomous Choice Formats’, in Global Environmental Change Working Paper 93-05, Centre for Social and Economic Research on the Global Environment, University of East Angia and University College London.Google Scholar
  2. Blamey, R. K., J. W. Bennett and M. D. Morrison (1999), ‘Yea-Saying in Contingent Valuation Surveys’, Land Economics 75(1), 126–141.Google Scholar
  3. Brown, T. C., P. A. Champ, R. C. Bishop and D. W. McCollum (1996), ‘Which Response Format Reveals the Truth about Donations to a Public Good?’, Land Economics 72(2), 152–166.Google Scholar
  4. Byrnes, B., C. Jones and S. Goodman (1999), ‘Contingent Valuation and Real Economic Commitments: Evidence from Electric Utility Green Pricing Programmes’, Journal of Environmental Planning and Management 42(2), 149–166.Google Scholar
  5. Carson, R. T., M. B. Conaway, W. M. Hanemann, J. A. Krosnick, K. M. Martin, D. R. McCubbin, R. C. Mitchell and S. Presser (1996), ‘The Value of Preventing Oil Spill Injuries to Natural Resources along California's Central Coast’, Report prepared by Natural Resource Damage Assessment, Inc.Google Scholar
  6. Carson, R. T., T. Groves and M. J. Machina (1999), ‘Incentive and Informational Properties of Preference Questions’, Plenary Address at European Association of Resource and Environmental Economists. Oslo, Norway.Google Scholar
  7. Carson, R. T., W. M. Hanemann, R. J. Kopp, J. A. Krosnick, R. C. Mitchell, S. Presser, P. A. Ruud, V. K. Smith, M. Conaway and K. Martin (1998), ‘Referendum Design and Contingent Valuation: The NOAA Panel's No-Vote Recommendation’, Review of Economics and Statistics 80(3), 484–487.Google Scholar
  8. Champ, P. A., R. C. Bishop, T. C. Brown and D. W. McCollum (1997), ‘Using Donation Mechanisms to Value Nonuse Benefits from Public Goods’, Journal of Environmental Economics and Management 33, 151–162.Google Scholar
  9. Champ, P. A. and T. C. Brown (1997), ‘A Comparison of Contingent and Actual Voting Behavior’, Proceedings from W-133 Benefits and Costs in Natural Resource Planning, Portland, Oregon.Google Scholar
  10. Chilton, S. M. and W. G. Hutchinson (1999), ‘Some Further Implications of Incorporating the Warm Glow of Giving into Welfare Measures: A Comment on the Use of Donation Mechanisms by Champ et al.’, Journal of Environmental Economics and Management 37(2), 202–209.Google Scholar
  11. Cummings, R. G., S. Elliott, G. W. Harrison and J. Murphy (1997), ‘Are Hypothetical Referenda Incentive Compatible?’, Journal of Political Economy 105(3), 609–621.Google Scholar
  12. Duffield, J. W. and D. A. Patterson (1991), ‘Field Testing Existence Values: Comparisons of Hypothetical and Cash Transaction Values’, Annual Meeting of the American Economic Association.Google Scholar
  13. Loomis, J. B. and A. Gonzalez-Caban (1997), ‘Comparing the Economic Value of Reducing Fire Risk to Spotted Owl Habitat in California and Oregon’, Forest Science 43(4), 473–482.Google Scholar
  14. Loomis, J., M. Lockwood and T. DeLacy (1993), ‘Some Empirical Evidence on Embedding Effects in Contingent Valuation of Forest Protection’, Journal of Environmental Economics and Management 24, 45–55.Google Scholar
  15. Marwell, G. and R. E. Ames (1981), ‘Economists Free Ride, Does Anyone Else?’, Journal of Public Economics 15, 295–310.Google Scholar
  16. Navrud, S. (1992), ‘Willingness to Pay for Preservation of Species — an Experiment with Actual Payments’, in Pricing the European Environment. New York: Oxford University Press.Google Scholar
  17. Poe, G. L., J. E. Clark, D. Rondeau and W. D. Schulze (1999), ‘Can Hypothetical Questions Predict Actual Participation in Public Programs? A Contingent Valuation Validity Test Using a Provision Point Mechanism’, Cornell Working Paper Series in Environmental and Resource Economics 97-05.Google Scholar
  18. Polasky, S., O. Gainutdinova and J. Kerkvliet (1996), ‘Comparing CV Responses with Voting Behavior: Open-Space Survey and Referendum in Corvallis’, Proceedings from W133 Benefits and Costs Transfer in Natural Resource Planning, Oregon.Google Scholar
  19. Ready, R. C., S. Navrud and R. W. Dubourg (forthcoming), ‘How do Respondents with Uncertain Willingness to Pay Answer Contingent Valuation Questions?’, Land Economics.Google Scholar
  20. Ready, R. C., J. C. Whitehead and G. C. Blomquist (1995), ‘Contingent ValuationWhen Respondents Are Ambivalent’, Journal of Environmental Economics and Management 29, 181–196.Google Scholar
  21. Schulze, W. D., R. C. d'Arge and D. S. Brookshire (1981), ‘Valuing Environmental Commodities: Some Recent Experiments’, Land Economics 57(2), 151–172.Google Scholar
  22. Seip, K. and J. Strand (1992), ‘Willingness to Pay for Environmental Goods in Norway: A Contingent Valuation Study with Real Payment’, Environmental and Resource Economics 2(1), 91–106.Google Scholar
  23. Spencer, M. A., S. K. Swallow and C. J. Miller (1998), ‘Valuing Water Quality Monitoring: A Contingent Valuation Experiment Involving Hypothetical and Real Payments’, Agricultural and Resource Economic Review 27(1), 23–42.Google Scholar
  24. U.S. Department of Commerce, National Oceanic and Atmospheric Administration, Natural Resource Damage Assessments: Proposed Rules, Federal Register 59, 1062-1191 (1994).Google Scholar
  25. Welsh, M. P. and G. L. Poe (1998), ‘Elicitation Effects in Contingent Valuation: Comparisons to a Multiple Bounded Discrete Choice Approach’, Journal of Environmental Economics and Management 36, 170–185.Google Scholar

Copyright information

© Kluwer Academic Publishers 2001

Authors and Affiliations

  • Patricia A. Champ
    • 1
  • Richard C. Bishop
    • 2
  1. 1.Rocky Mountain Research StationUSDA Forest ServiceFort CollinsUSA
  2. 2.Department of Agricultural and Applied EconomicsUniversity of WisconsinMadisonUSA

Personalised recommendations