Economic Valuation With Stated Preference Techniques: A Manual 

Ian J. Bateman 

University of East Anglia

Richard T. Carson 

University of California, San Diego 

Brett Day 

University of East Anglia 

W. Michael Hanemann 

University of California, Berkeley 

Nick Hanley 

University of Glasgow 

Tanis Hett 

Economics for the Environment Consultancy, Ltd. 

Michael Jones Lee 

University of Newcastle 

Graham Loomes 

University of East Anglia 

Susana Mourato 

Imperial College 

Ece Özdemiroglu 

Economics for the Environment Consultancy, Ltd. 

David W. Pearce 

University College, London 

Edward Elgar 

2002 
Table of Contents 

List of Figures 

List of Tables 

List of Boxes 

The Authors 

List of Acronyms 

Forward 

INTRODUCTION 

 Purpose of this manual 

 Justification for assigning economic values to non-market effects 

 A guide to the manual 

Part I: CONCEPTS 

1. The foundations of economic valuation 

1.1 The uses of economic valuation 

1.2 The nature of economic valuation and economic efficiency 

1.3 Economic valuation and other values 

1.4 Economic valuation when there are no markets 

1.5 Economic valuation and the demand curve 

1.6 Willingness to pay and willingness to accept 

1.7 Total economic value and aggregation 

1.8 Stated preferences and pubic participation 

ANNEX 1.1 Benefit transfer and stated preference techniques 

ANNEX 1.2 Use of stated preference in UK environmental policy: the case of 

aggregates levy 

ANNEX 1.3 Discounting 

2. Commissioning a stated preference study 

 2.1 Defining the context 

 2.2 Is economic valuation necessary and credible? 

 2.3 Choosing between economic valuation techniques 

 2.4 Commissioning a valuation study: a checklist 

 2.5 A typical work plan for a stated preference study 

PART II. STATED PREFERENCE TECHNIQUES 

3. population, sample and survey mode 

 3.1 Defining the target population 

 3.2 The need for and the importance of sampling 

 3.3 The sampling frame 

 3.4 Choosing the sample 

 3.5 Choosing the sampling mode 
 3.6 Choosing the sample size 

4. Designing a contingent valuation questionnaire 

 4.1 Useful lessons from other disciplines 

 4.2 The stages of designing a contingent valuation questionnaire 

 4.3 Pre-testing 

 4.4 The main survey 

 ANNEX 4.1 Writing survey questions 

5. Analysis of contingent valuation data 

 5.1 Contingent valuation datasets 

 5.2 Specification of the bid function 

 5.3 Estimating mean and median WTP 

 5.4 Models for testing the validity of WTP values 

 5.5 Models for benefit transfer exercises 

 5.6 Conclusions 

 ANNEX 5.1 Econometric estimation of the bid function 

 ANNEX 5.2 Estimating mean and median WTP 

6. Designing a choice modeling questionnaire 

 6.1 What is choice modeling? 

 6.2 Main choice modeling approaches 

 6.3 Common design stages 

6.4 Advantages and disadvantages of choice modeling relative to other 

economic valuation techniques 

7. Analysis of choice modeling data 

 7.1 Choice experiments 

 7.2 Contingent ranking 

 7.3 Contingent rating 

 7.4 Paired comparison 

8. Validity and reliability 

 8.1 Preferences, values and validity 

 8.2 Responses to survey questions: some basic issues 

 8.3 Value types and their consistency 

 8.4 Overview of the validity problem and types of validity testing 

 8.5 Content validity 

 8.6 Construct validity 

 8.7 Reliability 

 8.8 Summary of factors relevant to determining validity and reliability 

9. Aggregation 

 9.1 Conditions for valid aggregation 

 9.2 Aggregation approaches 

10. Reporting 

 10.1 Objectives 

 10.2 Methodology 

 10.3 Literature review 

 10.4 Population and sampling strategy 

 10.5 Questionnaire design and implementation 

 10.6 Results 
 10.7 Validity testing 

 10.8 Aggregation and implications 

 10.9 Annexes 

PART III. FURTHER ISSUES 

11. Combining revealed and stated preference techniques 

 11.1 Why combine revealed and stated preference data 

 11.2 Random utility models combining stated and revealed preference data 

 11.3 Contingent behavior panel data models of price changes 

 11.4 Contingent behaviour models of environmental quality changes 

 11.5 Conclusions 

12. Cautions, caveats and future directions 

 12.1 The standard neo-classical model of preferences 

 12.2 Elicitation and response mode effects 

 12.3 The disparity between WTP and WTA 

 12.4 Scope, embedding and sequence effects 

 12.5 ‘Other-regarding’ issues: altruism and reciprocity 

 12.6 Conclusions 

Bibliography 

Glossary 

Index 
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http://www.e-elgar.com/Bookentry_Main.lasso?id=2639

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