the assessment of households recycling costs the role of personal motives abstract this paper analyzes households perceptions of recycling activities in a municipality in northern sweden pitea the purpose of the paper is to analyze whether moral motives matter for the assessment of households waste sorting costs data were gathered using a mail out survey to 850 randomly chosen individuals in the municipality of pitea sweden we employ an economic model of moral motivation and econometric techniques the main result that follows from the analysis is that the results support the notion that moral motives significantly lower the costs associated with household recycling efforts

the theory of mixed demand functions abstract the properties of samuelson s mixed demand functions which express demand as a function of a mixed set of prices and quantities are derived by analyzing compensated or substitution effects and uncompensated effects the relationships between mixed demand functions and conditional or rationed demands are examined this provides insights on the behavioral implications of consumer theory for alternative demand specifications

arbitrary values good causes and premature verdicts abstract this paper offers an alternative interpretation of the conclusions kahneman and knetsch propose based on two contingent valuation cvm surveys the evaluation argues that while framing is important to cvm estimates the design implementation and empirical findings reported from these surveys do not support their judgments moreover with the exception of temporal embedding conventional economic descriptions of individual behavior can explain the response patterns that they suggest are at variance with standard value theory

testing for non response and sample selection bias in contingent valuation analysis of a combination phone mail survey we use a combination phone mail survey to test for possible sample biases in contingent valuation we find no sample selection bias but do find non response bias we show how failure to correct for non response bias distorts aggregate benefit estimates

protest responses and willingness to pay attitude toward paying for stormwater pollution abatement abstract in contingent valuation cv surveys there is often a proportion of individuals who are not willing to pay to obtain avoid an increase decrease in some attribute of a particular environmental public good some of these respondents might protest an aspect of the cv survey e g payment vehicle or the behavioral intention i e willingness to pay wtp constituting the measure of economic value respondents attitudes toward the behavior of paying for a particular public good may contribute to the decision to pay independent of other explanatory variables such as the price of the intervention household income and methodological characteristics of the cv survey moreover attitude toward paying for the good may manifest in protest responses as a reaction to higher prices and methodological factors e g the payment vehicle to the extent that protest beliefs are dependent on such matters of survey design they may be alleviated through changes in cv methodology however to the extent that protest beliefs are a reaction to the act of paying methodological remedies may not be effective cv surveys of stormwater pollution abatement were conducted in four australian state capital cities the surveys differed with respect to the type of pollution abatement intervention the payment regime the vector of prices used in the dichotomous choice question and the institution responsible for implementing the stormwater pollution intervention protest beliefs were measured for all respondents irrespective of their responses to the wtp question results indicated that attitude toward paying underpinned protest beliefs regarding the role of government in stormwater management and individual rights to unpolluted waterways this attitude was present in each city sample despite methodological differences between the cv surveys attitude toward paying explained variability in wtp and was a larger predictor than was price household income was significantly associated with attitude toward paying and this relationship was also invariant over city samples protest beliefs were not independent of either the wtp question or demographic factors such as household income rather these beliefs were related to wtp through attitudes toward the act of paying for stormwater pollution abatement censoring protest responses in the present study would bias cv samples toward those individuals who are favorably disposed toward paying for environmental public goods and those from higher income households

optimal asset allocation and risk shifting in money management this article investigates a fund manager s risk taking incentives induced by an increasing and convex relationship of fund flows to relative performance in a dynamic portfolio choice framework we show that the ensuing convexities in the manager s objective give rise to a finite risk shifting range over which she gambles to finish ahead of her benchmark such gambling entails either an increase or a decrease in the volatility of the manager s portfolio depending on her risk tolerance in the latter case the manager reduces her holdings of the risky asset despite its positive risk premium our empirical analysis lends support to the novel predictions of the model

comparative reliability of the dichotomous choice and open ended contingent valuation techniques abstract the comparative reliability of dichotomous choice and open ended contingent valuation methods cvm is evaluated by resurvey of the same households 9 months after their original survey test retest correlations on willingness to pay are statistically significant at the 1 level and range from 0 57 for the dichotomous choice cvm to 0 62 for the open ended cvm the test retest correlations were not statistically different between dichotomous choice and open ended cvm a likelihood ratio test for temporal stability of each method s willingness to pay functions indicates stability half of the time for both methods

social demand for electricity from forest biomass in spain does payment periodicity affect the willingness to pay in this article we analyze social preferences for a partial substitution programme of electricity generated by conventional energy sources for energy generated from a local renewable energy source such as forest biomass this analysis sets arguments in favour of accelerating the introduction of this renewable technology in the spanish electricity system simultaneously two methodological goals concerning the contingent valuation method are discussed in the first one we analyze if there are statistical differences in the willingness to pay wtp when a single or a double bounded format is employed to ask the valuation question results show that wtp estimates from single and double bounded significantly differ in the second one we analyze the effect of the periodicity of the payment vehicle on the estimates of welfare change the timeframe specification of the payment vehicle has been scarcely studied and this fact constitutes the main contribution of this paper to the specialized literature results show that periodicity influences upon the probability to favour the proposed change the periodicity does not affect to the mean wtp obtained in the single bounded format but there are statistical differences in the double bounded format these results might be explained by the presence of yea saying and payment scale bias

the causes of order effects in contingent valuation surveys an experimental investigation contingent valuation researchers have found that the hypothetical values respondents place on a nested sequence of environmental goods are sensitive to the order in which the goods are presented typically the smallest bundle of goods is valued more highly if presented first than if following more comprehensive bundles such effects appear even when each bundle is valued from an exclusive list or as an alternative to any other so that income and substitution effects are controlled we conduct lab experiments where participants are asked to value sequences of nested goods for purchase from an exclusive list using an incentive compatible becker degroot marschak mechanism we test whether order effects occur in valuation for a induced value goods b actual private goods and c identical private goods that are to be donated to charities we find significant order effects when the goods are valued for own use but not when they are valued for donation

interpretation and temporal stability of cv bids for wildlife existence a panel study existence values are playing an increasingly important role in wildlife preservation decisions but little is known about how these values behave over time and value estimates may often be misinterpreted panel study results suggest that although existence values may be relatively stable many individuals respond to contingent valuation by bidding their fair share or for the satisfaction from contributing to a good cause such as environmental quality although payment of fair share may represent a lower bound estimate of existence value payment for a good cause may or may not be closely related to the value of the resource itself

can contingent valuation distinguish economic values for oifferent public goods this paper reports the first test eval uating whether stated choices as part of a contin gent valuation survey discriminate between signifi cant and trivial causes using a random digit dialed sample for north carolina two different plans were posed to respondents one to expand a popular north carolina highway flower planting program nationwide and a second to facilitate the use of recycled tires in making asphalt for highways ran dom assignment identical payment mechanisms and overall question designs were used the results indicate clear discrimination in choices choice functions and the estimated willingness to pay for the two plans jel q26 d71

application of stochastic choice modeling to policy analysis of public goods a case study of air quality improvements this paper demonstrates the applicability of the stochastic choice method in performing policy analysis of changes in public goods using survey data the air quality problem studied involves air pollution control for the tampa bay area of florida and relatively simple choices between changes in a public good and disposable income it illustrates the use of surveys as a public forum in which preferences are revealed 26 references 2 tables

paper millionaires how valuable is stock to a stockholder who is restricted from selling it abstract many firms have stockholders who face severe restrictions on their ability to sell their shares and diversify the risk of their personal wealth we study the costs of these liquidity restrictions on stockholders using a continuous time portfolio choice framework these restrictions have major effects on the optimal investment and consumption strategies because of the need to hedge the illiquid stock position and smooth consumption in anticipation of the eventual lapse of the restrictions these results provide a number of important insights about the effects of illiquidity in financial markets

decisiveness attitude expression and symbolic responses in contingent valuation surveys abstract despite suggestions that respondents to contingent valuation studies often follow alternate models of individual decision making few theoretical models have been developed the paper presents a theoretical model of symbolic and attitude expressive contingent valuation responses drawing on relevant contributions in psychology and political science it is argued that the highly symbolic and emotional nature of many environmental issues often activates the need for individuals to express their attitudes and values which when coupled with a perceived non decisiveness of individual questionnaire responses can result in value expressive considerations dominating some cvm responses at the expense of the desired outcome appraisal economic tradeoffs the implications for some topical issues in cvm are explored

information bias in contingent valuation effects of personal relevance quality of information and motivational orientation abstract a laboratory experiment examined the potential for information bias in contingent valuation cv consistent with the view that information about a public or private good can function as a persuasive communication willingness to pay wtp was found to increase with the quality of arguments used to describe the good especially under conditions of high personal relevance under low personal relevance wtp for a public but not for a private good was higher when an altruistic as opposed to an individualistic orientation was activated it is concluded that the nature of the information provided in cv surveys can profoundly affect wtp estimates and that subtle contextual cues can seriously bias these estimates under conditions of low personal relevance

portfolio claustrophobia asset pricing in markets with illiquid assets many classes of assets are illiquid or nonmarketable in that they cannot always be traded immediately thus a portfolio position in these becomes at least tem porarily irreversible we study the asset pricing implications of this type of illiquidity in an exchange economy with heterogeneous agents in this market one asset is always liquid the other asset can be traded initially but then not again until after a blackout period illiquidity has a dramatic effect agents abandon diversification and choose polarized portfolios instead the value of liquidity can represent a large portion of the equilibrium price of an asset jel g11 g12

costly search and mutual fund flows this paper studies the flows of funds into and out of equity mutual funds consumers base their fund purchase decisions on prior performance information but do so asymmetrically investing disproportionately more in funds that performed very well the prior period search costs seem to be an important determinant of fund flows high performance appears to be most salient for funds that exert higher marketing effort as measured by higher fees flows are directly related to the size of the fund s complex as well as the current media attention received by the fund which lower consumers search costs

an assessment of agricultural development policies in iran abstract agricultural development policies in iran for the past two decades have been based on important misconceptions derived from a dualistic analysis of the economy the government concentrated on the development of the dynamic oil and industrial sector at the expense of the static rural sector as a result iranian self sufficiency in food and agricultural produce has been seriously eroded and the country has become increasingly dependent on the international market both in terms of importing foodstuffs and in gaining its main income through the export of a single item oil the present government s attempts at alleviating this problem should extend beyond revolutionary rhetoric and blanket policies and return the means of production to the cultivator and encourage the emergence of a peasant based and independent agricultural sector

mutual fund tournaments the sorting bias and new evidence previous findings regarding the risk shifting behavior of mid year underperforming mutual fund managers are mixed in this article i show that this is due to a sorting bias which is caused by the sorting of first half risk levels when establishing relative mid year performance even without risk shifting behavior mean reversion of these sorted risk levels results in the detection of tournament behavior after correcting for this bias i find evidence supporting the hypothesis that first half underperforming managers increase portfolio risk during the second half of the year and that this tournament behavior is not dependent on first half market conditions the author 2011 published by oxford university press on behalf of the society for financial studies all rights reserved for permissions please e mail journals permissions oup com oxford university press

reliability and predictive validity of contingent values does the nature of the good matter abstract because the contingent valuation mechanism cvm elicits verbal reports of maximum willingness to pay and not actual willingness to pay analysts have expressed doubts about the reliability and validity of contingent values for commodities such as environmental amenities this skepticism is usually attributed to the amorphous nature of the commodity and to peoples lack of familiarity or experience however our comparison of two commodities which lie at polar extremes of the private good public good continuum suggests that the nature of the good may have little influence on the reliability and predictive validity of the cvm instead aspects of the cvm itself e g explicit payment obligation may be more important for high intention behavior consistency

signals or noise explaining the variation in recreation benefit estimates this paper uses meta analysis to summarize the benefit estimates derived from travel cost recreation demand models after reviewing approximately 200 published and unpublished studies prepared from 1970 to 1986 77 were found to report either consumer surplus estimates or sufficient information to derive them using these estimates of the consumer surplus per unit of use from each study it was possible to evaluate the influence of variables describing the site characteristics the activities undertaken at each site the behavioral assumptions and the specification decisions the findings provide clear support for using econometric methods to summarize results from diverse empirical studies they highlight the important research issues in model development and offer a consistency check to the procedures used in benefit transfer analyses for policy evaluations

the validity of the contingent valuation method perfect and regular embedding this article deals with one aspect of the validity claim of the contingent valuation method namely to what extent does the method produce different values in situations for which economic theory claims different values two aspects of this validity test perfect and regular embedding were tested in a field experiment comprising six samples of the dutch population perfect embedding occurs when the value for a specific good is similar to the value for a more inclusive good perfect embedding did not manifest itself in the experiment respondents considered a package of six goods as well as a package of two goods more valuable than one of these goods it is argued that this supportive evidence of the method s validity claim occurred because the goods involved were well defined regular embedding occurs when the same good receives a lower value if the value for it is inferred from the value for a more inclusive good rather than if that good is valued on its own regular embedding was only found when respondents were given the opportunity to value the inclusive good before valuing the specific good respondents who were given information on the inclusive good without valuing it did not state different values than respondents who were not given that information it seems that respondents perceive an inclusive good as being relevant to their valuation decision only when they are asked to value it further research is necessary to shed more light on the underlying processes that may account for this

an application of a stated preference method to value urban amenities this is a case study analysis of how residents value the amenities of a small us city missoula montana a measure of a community s amenity values is needed in city planning so as to protect those

why are prices sticky preliminary results from an interview study this paper reports preliminary results from a large research project on business pricing which is currently underway the idea is to use interviews with actual price setters to assess the validity of a dozen theories of price stickiness the rather unorthodox for economists methodology is defended the research design is described briefly and a few results based on the first 72 interviews out of a projected 200 are presented this sample suggests that the median firm changes its price annually and that price adjustments typically lag 3 4 months behind shocks to demand or cost this abstract was borrowed from another version of this item

how does illiquidity affect delegated portfolio choice in response to how they are compensated mutual fund managers who are underperforming by mid year are likely to increase the risk of their portfolios toward the year end we argue that an increase in the liquidity of the stocks that managers use to shift risk can lead to an increase in the size of their risky bets this in turn hurts fund investors by increasing the costs of misaligned incentives associated with delegated portfolio management we provide both theoretical and empirical results that are consistent with this argument we use decimalization as an exogenous shock to liquidity to identify causal effects

on the choice of funtional form for hedonic price functions this study examines how errors in measuring marginal attribute pric es vary with the form of the hedonic price function in simulations consumers with known utility functions bid for houses with given attributes various forms of the hedonic function are estimated using equilibrium housing prices errors in estimating marginal attribute prices are calculated by comparing each consumer s equilibrium marginal bid vector with the gradient of the hedonic function when all attributes are observed linear and quadratic box cox forms produce lowest mean percentage errors however when some attributes are unobserved or are replaced by proxies linear and linear box cox functions perform best copyright 1988 by mit press

the importance of ethics in environmental economics with a focus on existence values the importance of ethics and fundamental value judgments in environmental economics is high lighted by discussing the controversial concept of existence values the social value depends crucially on the social objective which is not necessarily self evident e g since some individuals tend to value nature intrinsically it is shown that the motives behind willingness to pay figures matter for the social value and the conventional view that people respond to cv questions solely in order to maximize their own utility or well being is questioned the importance of being explicit about value judgments is emphasized and it is argued that environmental economics should consider non conventional assumptions which take the social context into account to a larger degree

three reasons to use annual payments in contingent valuation surveys convergent validity discount rates and mental accounting abstract we present three arguments for using ongoing annual payments in contingent valuation cv surveys that estimate the benefit of a long lasting environmental improvement first by matching the duration of the payments with the duration of the environmental benefits survey respondents are spared from performing complicated present value calculations second willingness to pay wtp estimates from cv surveys that include ongoing annual payments best match wtp estimates obtained using travel cost surveys third respondents are less likely to face binding mental budget constraints with ongoing annual payments than with a larger one time payment in addition respondents discount rates may be estimated by collecting non hypothetical individual time preference data as part of the valuation survey

valuing public goods with the contingent valuation method a critique of kahneman and knetsch the social stakes in the use and abuse of the contingent valuation method cvm are very high recent developments in environmental law have elevated the cvm to the status of a refutable presumption in cases brought under certain statutes it is no longer adequate for economists to sniff at the continued popularity of the cvm in such cases it is instead incumbent on economists to come to some conclusions as to the domain under which the cvm may or may not be correctly applied one should not expect a simple thumbs up or thumbs down assessment in this matter such an expectation would be naive with respect to the inherent complexity of the issue not to mention the financial incentives that expert witnesses might have to breed as if controversy in an adversarial legal system in this context the strong admonitions of kahneman and knetsch 3 kk against the casual use of the cvm must be carefully examined they present what they believe to be evidence to support the claim that the cvm suffers from an embedding effect and that any reported willingness to pay wtp is best interpreted as the purchase of moral satisfaction rather than as a measure of the value associated with a particular public good i argue that their evidence is insufficient to test the implied hypotheses that it is incorrectly reported and that it is in large measure fully consistent with received economic theory

environmental costing for agriculture will it be standard fare in the farm bill of 2000 this paper starts by discussing and estimating the environmental costs of agricultural production the author uses a separate benefit transfer intended to expose methodological issues to construct each cost category of agricultures s external effects this is followed by a simple description of the framework for production decisions that account for environmental costs included are attribution of environmental externalities and measurement of environmental costs finally the author discusses research implications of environmental costing including tqm and environmental policy analyses environmental services and their unit values strategies for measuring environmental values and prognosis for agricultural adders 42 refs 1 fig 1 tab

payoff complementarities and financial fragility evidence from mutual fund outflows the paper provides empirical evidence that strategic complementarities among investors generate fragility in financial markets analyzing mutual fund data we find that consistent with a theoretical model funds with illiquid assets where complementarities are stronger exhibit stronger sensitivity of outflows to bad past performance than funds with liquid assets we also find that this pattern disappears in funds where the shareholder base is composed mostly of large investors we present further evidence that these results are not attributable to alternative explanations based on the informativeness of past performance or on clientele effects we analyze the implications for funds performance and policies

plausible responsiveness to scope in contingent valuation plausible responsiveness to scope is a question of economic significance in addition to statistical significance of the scope test in contingent valuation we briefly review the history of the scope test in order to place the current issue in the context of the bp deepwater horizon oil spill as a result of the review we gain insights into how the issue of scope adequacy arose twenty years after it was first mentioned by the noaa panel on contingent valuation following the exxon valdez oil spill we then provide a review of desvousges mathews and train 2012 who promote the adding up test to identify inadequate responsiveness to scope adequacy the adding up test is a test of the construct validity of the contingent valuation method but is flawed as a measure of economic significance we propose scope elasticity of willingness to pay as a measure of economic significance a simulation suggests a likely range of elasticity estimates given linear and quadratic functional forms for the willingness to pay function in order to illustrate the ease of implementation of scope elasticity within the context of the standard scope test we calculate scope elasticity with willingness to pay estimates from several studies describe two studies that directly estimate scope elasticity and estimate scope elasticity with primary data from two studies all of these empirical estimates of scope elasticity fall within the range of scope elasticity suggested by the simulation scope elasticity provides a practical way forward relative to the adding up test on the issue of economic significance of scope effects

of tournaments and temptations an analysis of managerial incentives in the mutual fund industry we test the hypothesis that when their compensation is linked to relative performance managers of investment portfolios likely to end up as losers will manipulate fund risk differently than those managing portfolios likely to be winners an empirical investigation of the performance of 334 growth oriented mutual funds during 1976 to 1991 demonstrates that mid year losers tend to increase fund volatility in the latter part of an annual assessment period to a greater extent than mid year winners furthermore we show that this effect became stronger as industry growth and investor awareness of fund performance increased over time

part whole bias in contingent valuation will scope effects be detected with inexpensive survey methods the purpose of this paper is to test for scope effects with the contingent valuation method we use data from a telephone survey focusing on water quality improvements in the albemarle and pamlico sounds in north carolina we find that the willingness to pay estimates are sensitive to the scope of the policy these results suggest that the use of inexpensive survey methods may not be the cause of the failure to detect scope effects in some recent contingent valuation studies

as time goes by examination of temporal stability across stated preference question formats we evaluate the temporal stability of willingness to pay values obtained from two identical stated preference surveys undertaken in 2004 and 2012 the surveys employ two discrete choice elicitation formats to value reductions in two health endpoints related to tap water consumption and are explicitly designed to make direct comparisons between formats we find no significant differences in real willingness to pay between the two surveys for either format a result that is robust to the structure of heterogeneity used to model respondent preferences findings lend support at least within the context of tap water quality to the temporal transfer of nonmarket benefits over extended time periods

sequencing and valuing public goods abstract this paper establishes several propositions concerning the importance of context in valuing public goods it first provides necessary and sufficient conditions for the value of a public good to be independent of context utility constant valuation sequences are considered where public goods are systematically made available or taken away for the case of strict hicksian substitutes willingness to pay for an increase in one of the public goods is strictly decreasing the farther out in a sequence it is valued for the destruction of public goods the reverse is true for willingness to accept compensation sequencing has opposite implications for the assessment of the benefits of providing public goods than for the assessment of the damage from destroying them

moose hunting values in sweden now and two decades ago the swedish hunters revisited this paper is based on two national contingent valuation studies dealing with the extent and economic values of hunting in sweden the first valuation study was conducted in 1987 and the second in 2006 both the game resource and the hunter community have undergone changes in the two decades covered by the surveys an important purpose of the latter survey was to repeat relevant parts of the former one which created a rare opportunity to compare valuations covering a very long time span moose hunting value and its determinants were compared between the two studies showing that significant changes have taken place our analysis suggests caution in using results from old contingent valuation studies for e g benefits transfer exercises

valuing public goods a comparison of survey and hedonic approaches although the theory of public goods has progressed rapidly since paul samuelson s seminal article the empirical measurement of the value of demand for public goods only recently has received increased attention perhaps the best known and most widely accepted empirical approach has been the use of hedonic prices wherein for example it is assumed that either wages or housing values reflect spatial variation in public good characteristics of different communities this indirect approach based on theoretical work of charles tiebout kelvin lancaster sherwin rosen and others has proven quite successful among public goods or bads which have been valued using the hedonic approach are climate i hoch air pollution robert anderson and thomas crocker d harrison and d rubinfeld social infrastructure r cummings et al and other community characteristics such as noise level j nelson and ethnic composition ann schnare an alternative approach is to directly ask households or individuals to state their willingness to pay for public goods using survey techniques despite arguments that strategic bias will invalidate survey results there exists the need for an alternative to the hedonic approach as an example consider the case of a remote and unique scenic vista valuable to recreators which is threatened by air pollution from a proposed coal fired plant a typical situation in the western united states although it is possible in principle to impute the value of clean air and visibility from the relative decline in local visitation which might follow construction of a power plant information on the value of visibility at the site is needed prior to construction for socially optimal decision making on plant location and pollution control equipment the hedonic approach is unavailable both because the scarcity of local population as opposed to recreators makes use of wage or property value data impossible and because scenic vistas may themselves be unique for these reasons a randall et al first applied survey methods for valuing visibility and other environmental effects of large coal fired power plants in the four corners region of new mexico since this initial application the survey approach has been widely used to value environmental commodities where market data for hedonic analysis is difficult to acquire see for example brookshire ives and schulze rowe et al brookshire et al other early attempts to value public goods using the survey approach include r davis peter bohm and j hammack and g brown although results of using the survey approach for estimating the value of public goods appear to be internally consistent replicable and consistent with demand theory see schulze et al little work on external validation has been reported thus the purpose of this paper is to report on an experiment designed to validate the survey approach by direct comparison to a hedonic property value study the los angeles metropolitan area was chosen for the experiment because of the well defined air pollution problem and be assistant professor university of wyoming assistant professor university of missouri rolla associate professor university of wyoming and professor university of wyoming respectively the research reported here was funded under a grant methods development for assessing air pollution control benefits from the u s environmental protection agency we would like to give special thanks to alan carlin and shelby gerking for their helpful suggestions and contributions additional helpful comments were received from a myrick freeman iii john tschirhart and james murdoch all conclusions are of course our sole responsibility

cognitive ability and scale bias in the contingent valuation method this study investigates whether or not the scale bias found in contingent valuation cvm studies on mortality risk reductions is a result of cognitive constraints among respondents scale bias refers to insensitivity and non near proportionality of the respondents willingness to pay wtp to the size of the risk reduction two hundred swedish students participated in an experiment in which their cognitive ability was tested before they took part in a cvm study asking them about their wtp to reduce bus mortality risk the results imply that wtp answers from respondents with a higher cognitive ability are less flawed by scale bias

willingness to pay for improved air quality in sweden the aim of the paper is to quantify individual willingness to pay measures of improved air quality in sweden by using the contingent valuation method cvm such measures are important for policy makers when deciding about public investments and policy instruments in order to regulate environmental impacts e g from road transportation and industry the mean willingness to pay wtp for a 50 reduction of harmful substances where the respondents live and work was about 2000 sek year which is of the same order of magnitude as earlier stated preference studies in nordic countries most parameters in the econometric analysis had the expected sign wtp was increasing in income wealth and education it was larger for men members of environmental organizations people living in big cities which are on average more polluted and people who own their house or apartment it was lower for retired people however the additional wtp for people in big cities although significantly higher than for other people

contingent valuation controversies and evidence contingent valuation cv has become one of the most widely used non market valuation techniques cv s prominence is due to its flexibility and ability to estimate total value including passive use value its use and the inclusion of passive use value in benefit cost analyses and environ mental litigation are the subject of a contentious debate this paper discusses key areas of the debate over cv and the validity of passive use value we conclude that many of the alleged problems with cv can be resolved by careful study design and implementation we further conclude that claims that empirical cv findings are theoretically inconsistent are not generally supported by the literature the debate over cv however has clarified several key issues related to nonmarket valuation and can provide useful guidance both to cv practitioners and the users of cv results

the reliability of estimates of environmental benefits from recreation demand models recreation demand models are commonly employed tools of economists interested in valuing improvements in environmental amenities despite their importance little comparative work has been undertaken to examine the ability of the models to accurately estimate welfare changes a simulation study designed to compare the reliability of estimated welfare measures compensating variation and consumer surplus from several commonly employed recreation demand models is presented results of the study indicate that choice of functional form and model specification are important determinants of the resulting estimates of benefits

consumption process and multiple valuation of landscape attributes abstract environmental valuation can be seen as a process which evolves as individuals reflect on their consumption experience in this paper we consider how environmental values could change as the subject has reached the end of the consumption process a split sample comparison is conducted for estimating the values tourists give to a set of landscape attributes the first subsample was taken on site as subjects were on a tour contemplating the landscape of the island of gran canaria canary islands the second subsample was contacted at the airport when individuals were about to leave the tourist enclave since landscapes are complex environmental goods we utilize and compare a multiple contingent valuation cv approach with the stated preference approach of contingent ranking the results show that the influence of the consumption experience depends on the valuation method and the consideration of interaction effects in the model the valuation functions were not stable across both sites for most of the models considered and some of the attributes changed their values between the two points of the consumption process interaction effects were more relevant with the contingent ranking model suggesting that cv is a more limited approach in a context of multiple valuation

on visible choice sets and scope sensitivity abstract in this paper we argue that the burgeoning empirical debate over scope sensitivity within contingent valuation studies is fundamentally incomplete in that it has neglected a systematic examination of certain effects of study design upon observed scope sensitivity in particular we highlight the fact that in certain study designs the choice set initially offered or visible to respondents is changed in a stepwise manner as they progress through a valuation exercise while other designs involve advance disclosure regarding the full extent of the final visible choice set prior to any choices or values being elicited the issue of changes in the visible choice set is alluded to by smith j environ econom manage 22 1 71 who identifies this as a primary challenge to kahneman and knetsch s j environ econom manage 22 1 57 well known experimental results kahneman and knetsch contend that it seems highly implausible that this minor procedural change would significantly alter results p 61 but do not test this assertion we present experimental and field tests of the impact upon contingent values of varying the visible choice set through stepwise and advance disclosure these dimensions of design are interacted with changes in the order in which nested goods are presented bottom up versus top down when a stepwise disclosure procedure is adopted the observed scope sensitivity is substantially and significantly affected by the order in which goods are presented but such procedural variance is not observed within advance disclosure designs conjectures regarding the origin and implications of such findings are presented

problems in valuing the benefits of biodiversity protection this paper considers two problems in valuing the benefits of biodiversity protection these are firstly that preferences for biodiversity protection may be lexicographic rather than utilitarian the more individuals for whom this is true the less is cost benefit analysis validated as a means of decision making for biodiversity protection since lexicographic preferences are incompatible with the kaldor hicks compensation test secondly people may be poorly informed about the meaning of biodiversity complicating the use of contingent valuation as a means of measuring preservation benefits this paper first discusses the meaning of biodiversity and trends in diversity over time we offer some empirical evidence with regard to lexicographic preferences consider the implications of having poorly informed consumers and then report the results of a contingent valuation study of biodiversity protection with varying levels of information we find that willingness to pay for biodiversity protection increases with the level of information provided

willingness to pay and willingness to accept how much can they differ comment i agree with the point made by edoh y amiran and daniel a hagen 2003 that there can be a substantial or even infinite divergence between the wta and wtp for a public good even where there is a nonzero elasticity of substitution between market goods and the public good provided that the indifference curves are asymptotically bounded with respect to market goods in the manner they describe this is an important point they are also correct to point out that the elasticity of substitution is a local concept whereas their asymptotic boundedness condition applies also for discrete changes my 1991 paper used a local analysis because it was following the structure of the analysis in robert d willig 1976 and alan randall and john r stoll 1980 i wanted to show that while randall and stoll appeared to extend willig s local result on wta versus wtp from price changes to changes in the quantity of a public good the relevant elasticity was in fact different and involved the substitution elasticity as well as the income elasticity i view these points by amiran and hagen as not two separate results but essentially the same result their asymptotic boundedness condition generalizes my zero elasticity of substitution condition to discrete changes the asymptotic boundedness condition can be expressed as follows assuming a bivariate utility function u x q and given a reference point x q associated with a reference utility level u u x q there exists some q q such that for all q q there exists no x such that u x q u in other words no amount of x can substitute for the reduction in public good from q to q q in the case of a zero elasticity of substitution q q but as amiran and hagen show in their theorem 1 this is unnecessarily restrictive when dealing with a discrete reduction in q furthermore their theorem 2 can be viewed as a special case of their theorem 1 in which q 0 which makes q an essential commodity it is well known in consumer theory that the wta to avoid the loss of an essential market good is infinite their theorem 2 extends this result to the case of an essential nonmarket good but as their theorem 1 shows essentialness is not necessary for an infinite wta the boundedness condition is the key and this implies a fundamental lack of substitutability between money market goods and the public good

comparing welfare estimates of environmental quality changes from recreation demand models abstract this paper presents a procedure for examining the reliability of welfare estimates resulting from the estimation of multiple site recreation demand models a simulation approach is suggested where a utility function is combined with observations on individual and site characteristics to generate simulated data sets welfare measures associated with an improvement in site quality are calculated recreation demand models are estimated using the simulated data sets estimated welfare measures resulting from the recreation demand models are then compared to the true welfare measures calculated from the simulated data the procedure is demonstrated using two commonly employed recreation demand models

cost benefit analysis and environmental policy the use of cost benefit analysis cba in british environmental policy has gone through several stages early applications of cba tended to ignore environmental impacts altogether leave them for a subsidiary impact analysis or provide only a partial monetization of impacts currently cba is the subject of renewed interest in government departments in the environment agency and among other agencies providing guidance and advice to government while the amount of cba being undertaken has increased its influence on policy making is open to question obstacles remain much cba is expensive and this means that benefits transfer is widely regarded as essential currently however the validity of much benefits transfer is questionable other problems arise from misunderstandings about the nature of economic values and the links to individuals self interest and from concerns that cba results will crowd out flexibility in decision making especially the likely context of multiple political objectives over and above economic efficiency none the less cba has begun to have influence in the setting of environmental taxes and alternative decision rules appear to suffer as many if not more shortcomings as those faced by cba copyright 1998 by oxford university press

the structure of motivation for contingent values a case study of lake water quality improvement abstract critics of the contingent valuation cv method have argued that individuals apply noneconomic motives in responding to cv questions implying that elicited values are not valid measures of the economic benefit of environmental improvement this study examines the role of such motives by using measures of attitude and motive strength to interpret willingness to pay wtp values for a set of nested environmental goods with potential use and nonuse benefits motivational structure is found to be more complex than suggested by the simple distinction between valid economic theoretic and noneconomic motives social motivations possibly associated with the benefit of contributing to a public good rather than the benefits of the good itself are potentially relevant to the wtp decision but do not give rise to separable values the strength of perceived personal responsibility for provision of the good is significantly associated with wtp but also with the theoretically desirable property of enhanced scope sensitivity wtp is not found to be associated with the extent to which the individual feels under some general moral obligation to contribute to good causes motives arising from ethical concerns for the environment and altruism are also potentially relevant to wtp but are closely related to underlying motives associated with existence and personal use values respectively it is suggested that the cv debate should be informed by further empirical investigation of the extent to which motives for wtp can be treated as separable

ordering effects in nested top down and bottom up contingent valuation designs abstract within a contingent valuation cv survey ordering effects are defined where responses to a given question vary in a theoretically unanticipated manner according to the positioning of that question relative to others in the survey instrument this paper employs a split sample cv design to investigate the potential for such ordering effects upon stated willingness to pay for nested goods in one top down design values are first elicited for protecting the whole of an endangered area after which values for a part sub area are elicited a second bottom up treatment reverses the order of valuation tasks with the part scheme valued prior to the whole results show that whole and part valuation responses are logically ordered and determined by a consistent set of factors irrespective of question order however variance to question order was observed in both the part and whole valuations the correspondence of these results to standard and non standard preference theories is explored and the difficulties and practical issues concerning valuing nested goods are highlighted

portfolio choice with illiquid assets we present a model of optimal allocation to liquid and illiquid assets where illiquidity risk results from the restriction that an asset cannot be traded for intervals of uncertain duration illiquidity risk leads to increased and state dependent risk aversion and reduces the allocation to both liquid and illiquid risky assets uncertainty about the length of the illiquidity interval as opposed to a deterministic nontrading interval is a primary determinant of the cost of illiquidity we allow market liquidity to vary from normal periods when all assets are fully liquid to illiquidity crises when some assets can only be traded infrequently the possibility of a liquidity crisis leads to limited arbitrage in normal times investors are willing to forgo 2 of their wealth to hedge against illiquidity crises occurring once every 10 years this paper was accepted by itay goldstein finance

the welfare cost of uncertainty in policy outcomes this paper proposes a simple index of the welfare significance of uncertainty in the public goods resulting as policy outcomes our measure is the ex ante compensation an individual would require to accept an uncertain level of service compared to receiving the expected value of the distribution of possible values for that service our compensation measure is a function of the coefficient of relative risk aversion the variance in the measure of environmental service associated with policy and relevant for the individual and a set of conventional parameters that describe the properties of nonmarket benefit measures under conditions of certainty we would expect that the inverse virtual price elasticity of the for the environmental service and the square of the coefficient of relative variation are the primary factors influencing the size of our compensation index this abstract was borrowed from another version of this item

sequencing and the adding up property in contingent valuation of endangered species are contingent non use values economic values this paper presents tests of the theoretical validity of the contingent valuation cv method the validity of cv is especially a concern when involving environmental goods with a predominant non use value one test of theoretical validity is the adding up property that implies that a specific good should be equally valued irrespectively of it is being valued directly or built up sequentially in this cv study four independent sub samples stated willingness to pay for the same composite good or package using different sequences one sub sample valued the composite good directly while two sub samples faced built up sequences valuing first subsets of this composite good a fourth sub sample valued the composite good from a dividing out approach facing first the valuation of a larger multi package theoretically expected sequencing effects were observed the subset goods obtained higher values earlier in a sequence and the dividing out approach decreased the stated value for the composite good most importantly these cv data did pass the tests of the adding up property

land reform policies in iran land reform 1962 71 contrary to a widespread view gave land on highly favorable terms to all of iran s 1 8 million tenant cultivators and benefited 74 of all farmers and 67 of rural households it thus radically changed landownership and resulted in a far reaching socioeconomic tranformation it did not however result in political stability this article identifies some of the sources of error in the literature on land reform in iran and shows that official land reform data are correct and consistent with numerous census results

multiple attribute decision analysis for ecosystem management abstract implementation of an ecosystem approach to natural resource management requires evaluation of a broad array of ecological services in a multidimensional community based watershed approach that empowers people to make informed management decisions conventional economic approaches that assign values to ecological services contingent valuation or that evaluate the efficiency of preserving and restoring those services cost benefit analysis are quite limited for this purpose in addition to the methodological difficulties encountered in applying contingent valuation and cost benefit analysis several problems occur when nonmarket values of ecological services are estimated independently of ecosystem planning and management multiple attribute decision making madm is an alternative conceptual framework for evaluating and selecting land and water resource management systems lwrms advantages of madm are that it facilitates community based collaborative decision making avoids some of the ethical theoretical and practical shortcomings of conventional economic approaches does not require assigning monetary values to ecological services allows consideration of multiple attributes and is not culturally biased the madm model described in this paper explains how a property manager selects the most preferred lwrms for a property based on their multiple stochastic attributes application of the model requires determination of the technically feasible lwrms for a property and specification of the socially acceptable ranges of attributes this information is combined with economic biophysical simulations to derive the efficient combination of attributes and lwrms for a property the property manager then selects the most preferred combination of attributes from the efficient combinations of attributes for a property using utility maximization surrogate worth tradeoff free iterative search analytical hierarchy process aspiration reservation based decision support system or stochastic dominance a watershed alliance can evaluate the sustainability of the most preferred lwrms for properties in a watershed based on a weak or strong sustainability criterion if the alliance determines that the most preferred lwrms are not sustainable then an index of attributes is used to evaluate the cost effectiveness of alternative public policies for stimulating the adoption of more sustainable lwrms

sensitivity of contingent valuation to alternative payment schedules insensitivity to payment schedule wherein respondents do not adequately differentiate between a one time payment and a series of payments may be an important but often overlooked factor in the design interpretation and use of contingent valuation studies several contingent valuation experiments involving a familiar private good and a less familiar environmental commodity indicate that although respondents distinguished between lump sum and periodic payment schedules implicit discount rates were very high suggesting that sensitivity to payment schedule is an important subject for further study

more laboratory evidence on the disparity between willingness to pay and compensation demanded abstract recent experimental work showing a disparity between willingness to pay for and compensation demanded to give up lottery tickets is contrary to economists ideas about rationality presented here are the results of experiments in which subjects participate in second price auctions to indicate willingness to pay and compensation demanded for lottery tickets that have fixed odds of winning or losing money when the auction institution used has truthful revelation of preferences as the dominant strategy and that strategy is announced to subjects the difference between the measures of value decreases significantly the within subject comparison design provides a more discriminating measure of behavior than between subject comparison designs used previously

imprecise preferences and survey design in contingent valuation during recent years the contingent valuation cv method has been widely used to value non marketed goods and services we present the results of a cv study of the value of road safety we find that stated preferences for road safety exhibit considerable imprecision appear subject to various systematic biases and are insensitive to variations in the quantity and quality of the safety improvements concerned one broad implication of these findings may be that for an important class of goods of which safety is one example standard assumptions about the structure of people s preferences may be much too strong a more specific implication concerning the design and conduct of cv surveys is that the noaa panel s widely cited blueprint for good cv practice may rely far too heavily on assumptions about the precision and sensitivity of people s preferences

valuing environmental quality weak complementarity with sets of goods in practice it is frequently impossible to identify a single good which is a weak complement to an environmental amenity for which welfare measures are desired however a set of goods exhibiting this property sometimes exists e g water related recreational activities when the nonmarket good to be valued is water quality a set of weak complements is defined and implications for welfare measurement presented the proper welfare measure now involves evaluation of a line integral and simple additions of areas under demand curves will not always be correct however under certain econometric circumstances approximate welfare measures can be obtained from estimated functions

mixing methods within stated preference environmental valuation choice experiments and post questionnaire qualitative analysis abstract assessing public preferences for natural resources is a difficult task the complexity of the research problem has encouraged practitioners to adopt qualitative approaches as exploratory and diagnostic tools within the conventionally more quantitative stated preference research building on best practice from previous studies this paper reports the findings of post questionnaire focus group analysis investigating the adequacy of a choice experiment ce valuation exercise and its public acceptability the specifics of the scenario and design choices are shown to markedly reduce problems of charity like and bid realism fair share responses observed in previous studies and significant sensitivity to good characteristics is observed however a less tractable problem of valuing unfamiliar goods remains with insights given regarding public acceptability and the usefulness of the findings to environmental decision making

test retest reliability of the contingent valuation method a comparison of general population and visitor responses the reliability of the contingent valuation method is evaluated by resurveying the same general households and visitors nine months after their original survey test retest correlations on willingness to pay are statistically significant and ranged from 422 for the general population sample to 782 for the visitor sample using a paired t test there was no statistical difference between an individual s first and second reported willingness to pay chow tests comparing the original and resurvey willingness to pay functions showed no statistical difference at the 01 level reported willingness to pay is reasonably stable over the time period surveyed

agricultural policy and performance in iran the post revolutionary experience abstract the agricultural sector of iran has experienced low growth rates since the 1979 revolution this has happened despite remarkable increases in the use of inputs such as fertilizers and farm machinery and despite the post revolutionary government s proclaimed emphasis on agricultural development and self sufficiency in food in search of the causes of this weak performance we examine the trends in agricultural prices and investment expenditures our analysis of the available data shows that increased labor costs have reduced the profitability of agricultural production as a whole and that the government s lopsided control of agricultural prices has turned production incentives against food grains also between 1978 and 1982 agricultural investment and research and development expenditures especially the infrastructural and basic research parts have been significantly cut these shortcomings have impeded agricultural growth in the early 1980s the post revolutionary development institutions have helped increase input use and redirect government resources toward smaller investment projects that benefit small farmers and the rural poor the more recent changes in the investment and research policies of the government seem to be favorable however the continuing war effort and the decline of oil revenues have severely restrained the overall availability of development funds in the iranian economy

measuring the existence value of wildlife what do cvm estimates really show two research programs are brought together to contribute to the growing body of work on alternatives to standard welfare based approaches to environmental valuation and policy the first is the theoretical literature undermining the new welfare

limits to substitution and irreversibility in production and consumption a neoclassical interpretation of ecological economics abstract there are many methodological approaches within ecological economics one of the principal modes of analysis is a modified version of the standard neoclassical model this paper examines the parallels which emerge between the ideas of some ecological economists concerning production and the ideas of others concerning consumption when these ideas are interpreted in the neoclassical paradigm it is well known that ecological economics is characterized by arguments concerning limits to substitution between inputs energy natural capital etc vs manufactured capital labor etc in production and the implications these have for sustainability however various authors have also expressed concerns regarding limits to substitution in consumption either between environmental assets and other goods or between basic needs commodities and other goods though the specific reasons for non substitution are different in the production and consumption cases the underlying theme is that individual commodities and other inputs have unique physical or other properties which make them poor substitutes ideas about irreversibility in production and economic development are also prominent in ecological economics likewise many authors have argued for similar irreversibilities in consumption behavior in analogy to the term technological change i coin the term preferential change to describe these phenomena the linking themes in this case are that the economy environment system is evolutionary in character and that external effects intended and unintended consequences of actions or processes imposed on other parties or resources are all pervasive