A general model for treatment of protests and no-answer responses in contingent valuation method

  • Received May 12, 2017;
    Accepted May 26, 2017;
    Published June 9, 2017
  • Author(s)
    Pei-Ing Wu
    ORCID , Szu-Hao Chen , Je-Liang Liou
  • DOI
    http://dx.doi.org/10.21511/ee.08(2).2017.04
  • Article Info
    Volume 8 2017, Issue #2, pp. 38-49
  • TO CITE АНОТАЦІЯ
  • Cited by
    2 articles
  • 921 Views
  • 476 Downloads

Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License

This study formulates a general model to account for the protest responses and no-answer replies. The distinct characteristics of this model are general in three ways: simultaneously accounting for protest and no-answer responses, applicable to all kinds of elicitation formats in contingent valuation, and simplicity in estimation. Creation of inverse Mills ratio is the distinctive step in this general model. The inverse Mills ratio is continuously carried in the subsequent estimation for the modification of different types of elicitation formats in this general model. The results generally indicate that these ratios are significantly different from zero. This means that accounting for these Mills ratios does have an important role in such modification when protest responses and/or no-answer responses are both taken into account. The results show that overall total willingness to pay from the general model with inclusion of protest and no-answer responses under different types of elicitation formats are higher than those estimated by traditional treatment. The degree of underestimation of traditional treatment is between 26% and 67%. That is, the general model proposed here for treating protest and/or no-answer responses in contingent valuation method can account for the full information, which might be potentially omitted or inappropriately dealt with in the estimation.

view full abstract hide full abstract
    • Fig. 1. The general model for non-protest, protest, and no-answer responses
    • Table 1. Definition and mean values for all variables used in different estimations1
    • Table 2. Results of multinomial logit estimation for identification of response type
    • Table 3. Comparison of estimation results of general model with inclusion of non-protest, protest, and no-answer responses and traditional Tobit with protest responses
    • Table 4. Comparison of total WTP from traditional treatment of protest and no-answer responses and from general model under different types of elicitation categories
    • Alberini, A., Boyle, K., and Welsh, M. (2003). Analysis of contingent valuation data with multiple bids and response options allowing respondents to express uncertainty. Journal of Environmental Economics and Management, 45(1), 40-62.
    • Alvarez-Farizo, B. (1999). Estimating the benefits of agri-environmental policy: Econometric issues in open-ended contingent valuation studies. Journal of Environmental Planning and Management, 42(1), 23-43.
    • Arrow, K., Solow, R., Portney, P. R., Leamer, E. E., Radner, R., and Schuman, H. (1993). Report of the NOAA Panel on contingent valuation. Federal Register, 58(10), 4600-4614.
    • Atkinson, G., Morse-Jones, S., Mourato, S., and Provins, A. (2012). When to take ‘no’ for an answer? Environmental and Resource Economics,51 (4), 497-523.
    • Balcombe, K., and Fraster, I. (2009). Dichotomous-choice contingent valuation with ‘don’t know’ responses and misreporting. Journal of Applied Econometrics, 24(7), 1137-1152.
    • Barrio, M., and Loureiro, M. M. L. (2010). An alternative approach to identifying protest attitudes in choice experiments. Bioecon Conference, 58(3), 27-28.
    • Bateman, I. J., Langford, I. H., Turner, R. K., Willis, K. G., and Garrod, G. D. (1995). Elicitation and truncation effects in contingent valuation studies. Ecological Economics, 12(2), 161-179.
    • Bishop, R. C., and Heberlein, T. A. (1979). Measuring values of extramarket goods: Are indirect measures biased? American Journal of Agricultural Economics, 61(5), 926-930.
    • Bourguignon, F., Fournier, M., and Gurgand, M. (2007). Selection bias corrections based on the multinomial logit model: Monte Carlo comparisons. Journal of Economics Surveys, 21(1), 174-205.
    • Brouwer, R., and Martín-Ortega, J. (2012). Modeling self-censoring of polluter pays protest votes in stated preference research to support resource damage estimations in environmental liability. Resource and Energy Economics, 34(1), 151-166.
    • Carson, R. T., and Sun, Y. (2007). The Tobit model with a non-zero threshold. Econometrics Journal, 10(3), 488-502.
    • Cragg, J. G. (1971). Some statistical models for limited dependent variables with application to the demand for durable goods. Econometrica, 39(5), 829-844.
    • Cunha-e-Sá, M., Madureira, L., Nunes, L. C., and Otrachshenko, V. (2012).Protesting and justifying: A latent class model for contingent valuation with attitudinal data. Environmental and Resource Economics, 52(4), 531-548.
    • Dalmau-Matarrodona, E. (2001). Alternative approaches to obtain optimal bid values in contingent valuation studies and to model protest zeros: Estimating the determinants of individual’s willingness to pay for home care service in day case surgery. Health Economics, 10(2), 101-118.
    • Dubin, J. A., and McFadden, D. L. (1984). An econometric analysis of residential electric appliance holdings and consumption. Econometrica, 52(2), 345-362.
    • Dziegielewska, D. A., and Mendelsohn, R. (2007). Does ‘no’ mean ‘no’? a protestmethodology. Environmental and Resource Economics, 38(1), 71-87.
    • Fonta, W. M., Ichoku, H. E., and Kabubo-Mariara, J.(2010). The effect of protest zeros on estimates of willingness to pay in healthcare contingent valuation analysis. Applied Health Economics and Health Policy, 8(4), 225-237.
    • Groothuis, P. A., and Whitehead, J. C. (2002). Does don’t know mean no? analysis of ‘don’t know’ responses in dichotomous choice contingent valuation questions. Applied Economics, 34(15), 1935-1940.
    • Halstead, J. M., Luloff, A. E., and Stevens, T. H. (1992). Protest bidders in contingent valuation. Northeastern Journal of Agriculture Resource Economics, 21(2), 160-169.
    • Havet, N., Morelle, M., Remonnay, R., and Carrere, M. (2012). Econometric treatment of few protest response in willingness-to-pay studies: An application in health care. Recherches Économiques de Louvain, 78(2), 53-74.
    • Heckman, J. J. (1979). Sample selection bias as a specification error. Econometrica, 47(1), 153-161.
    • Hung, C.-M., Shaw, D., Lin, H.-I., Wu, P.-I., Chien, Y.-L., Liou, J.-L., Huang, T.-H. (2012). Application and Review of Environmental Impact and Benefit-Cost Analysis of Project Development. EPA-101-E103-02-207. Project Supported by Environmental Protection Agency. Chung-Hua Institution for Economic Research, Taipei, Taiwan.
    • Hsiao, C., and Sun, B. H. (1998). Modeling survey response bias: with an analysis of the demand for an advanced electronic device. Journal of Econometrics, 89(1-2), 13-39.
    • Hones, N., Sophoulis, C. M., and Malesios, C. (2008). Economic valuation of coastal water quality and protest responses: A case study in Mitilini, Greece. The Journal of Socio-Economics, 37(6), 2478-2491.
    • Jorgensen, B. S., Syme, G. J., Bishop, B. J., and Nancarrow, B. E. (1999). Protest response in contingent valuation. Environmental and Resource Economics, 14(1), 131-150.
    • Langford, I. H., Bateman, I. J., and Langford, H. D. (1996). A multilevel modeling approach to triple-bounded dichotomous choice contingent valuation. Environmental and Resource Economics, 7(2), 192-211.
    • Li, C. Z., and Mattson, L. (1995). Discrete choice under preference uncertainty: An improved structural model for contingent valuation. Journal of Environment Economics and Management, 28(2), 256-269.
    • Lindsey, G. (1994). Market models, protest bids, and outliers in contingent valuation. Journal of Water Resources Planning and Management, 120(1), 121-129.
    • Meyerhoff, J., and Liebe, U. (2006). Protest beliefs in contingent valuation: Explaining their motivation. Ecological Economics, 57(4), 583-594.
    • Meyerhoff, J., and Liebe, U. (2009). Status quo effect in choice experiments: Empirical evidence on attitudes and choice task complexity. Land Economics, 85(3), 515-528.
    • Meyerhoff, J., Bartczak, A., and Liebe, U. (2012). Protester or non-protester: A binary state? On the use (and non-use) of latent class models to analyses protesting in economic valuation. The Australian Journal of Agricultural and Resource Economics, 56(3), 438-454.
    • Presser, S., and Schuman, H. (1980). The measurement of a middle position in attitude surveys. Public Opinion Quarterly, 44(1), 70-85.
    • Randall, A., Ives, B., and Eastman, C. (1974). Bidding games for valuation of aesthetic environment improvements. Journal of Environmental Economics and Management, 1(2), 132-149.
    • Ready, R. C., Navrud, S., and Dubourg, W. R. (2001). How do respondents with uncertain willingness to pay answer contingent valuation questions? Land Economics, 77(3), 315-326.
    • Reiser, B., and Shechter, M. (1999). Incorporating zero values in the economic valuation of environmental program benefits. Environmetrics, 10(1), 87-101.
    • Scarpa, R., and Bateman, I. (2000). Efficiency gains afforded by improved bid design versus follow-up valuation questions in discrete-choice CV studies. Land Economics, 76(2), 299-311.
    • Shaikh, S. L., Sun, L., and van Kooten, G. C. (2007). Treating respondent uncertainty in contingent valuation: A comparison of empirical treatments. Ecological Economics, 62(1), 115-125.
    • Strazzera, E., Genius, M., Scarpa, R., and Hutchinson, G. (2003). The effect of protest votes on the estimates of WTP for use values of recreational sites. Environmental and Resource Economics, 25(4), 461-476.
    • Wang, H. (1997). Treatment of ‘don’t know’ response in contingent valuation surveys: A random valuation model. Journal of Environment Economics and Management, 32(2), 219-232.
    • Whitehead, J. C., Groothuis, P. A., and Blomquist, G. C. (1993). Testing for non-response and sample selection bias in contingent valuation: Analysis of a combination of phone/mail survey. Economic Letters, 41(2), 215-220.
    • Wu, P.-I, Cheng,W.-F., and Su, M.-T. (2004). Model of multiple-hurdle with decision process: A possible resolution of protest responses in contingent valuation questions. Agriculture and Economics, 33, 29-60.
    • Zoltán, S. (2011). Reducing protest responses by deliberative monetary valuation: Improving the validity of biodiversity valuation. Ecological Economics, 72(15), 37-44.
Download Preview
Close
Environmental Economics
Environmental Economics