A comparison of empirical models used to infer the willingness to pay in contingent valuation

The essence of the contingent valuation method consists of creating a hypothetical market where respondents are asked about their willingness to pay (WTP) for a non-market good. Different empirical models can be formulated to estimate the expected WTP of a sample of respondents and, then, through ag...

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Bibliographic Details
Published in:Empirical economics 2005-05, Vol.30 (1), p.235-244
Main Authors: Bengochea-Morancho, Aurelia, Fuertes-Eugenio, Ana Ma, del Saz-Salazar, Salvador
Format: Article
Language:English
Subjects:
Applied economics
Comparative analysis
Consumption
Economic models
Economic theory
Empirical research
Estimating techniques
Methodology
Model testing
Modelling
Statistical models
Studies
Valuation
Willingness to pay
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Summary:The essence of the contingent valuation method consists of creating a hypothetical market where respondents are asked about their willingness to pay (WTP) for a non-market good. Different empirical models can be formulated to estimate the expected WTP of a sample of respondents and, then, through aggregation, the social valuation of the good is inferred. This paper outlines the relevance of the distributional assumptions when estimating mean WTP. Several parametric and non-parametric methods are discussed and applied to calculate the existence value of a natural space. Results show that WTP is extremely sensitive to the empirical model used. [PUBLICATION ABSTRACT]
ISSN:0377-7332
1435-8921
DOI:10.1007/s00181-005-0236-x