Environmental Economics

Sources of Error in Contingent Valuation

Problems with hypothetical bias have become a central issue in the application of the contingent valuation methods. Hypothetical bias is the difference between the distribution of hypothetical bids obtained from a survey and the distribution of bids that would obtain in areal world incentive compatible market setting. The purpose of this paper is to examine sources of hypothetical bias in a field application of contingent valuation methods. The paper identifies four possible problem area sources of hypothetical bias: 1) large positive outlier bids, 2) refusals to bid, 3) viewing public goods as joint products, and 3) survey context. In the field application, residents of the Denver metropolitan area were asked to value air quality there. The paper discusses the survey protocol used for examining these issues and presents the data analysis and results. Suggestions and recommendations for future research are made.

  • Keywords

    1. Benefits Analysis
    1. Benefits Analysis - Valuation
    1. Benefits Analysis - Valuation - Stated Preference
    1. Benefits Analysis - Valuation - Stated Preference - Contingent Valuation
    Environmental Media:
    a. Air
    a. Air - Tropospheric
    McClelland, Gary H.
    Schulze, William D.
    Waldman, Donald
    Irwin, Julie R.
    Schenk, David
    EPA Project Officer/ Manager:
    Carlin, Alan
    Geographic Area:
    Study Purpose:
    Empirical Application, Methodology Development & Evaluation
    Inventory Record #: EE-0152
  • Participating Organizations

    Research Organization:

    Colorado at Boulder, University of, Department of Psychology and Center for Research on Judgment and PolicyAddress:
    City: Boulder State: CO ZIP: 80309
    Phone: Fax:
    Funding Organization:
    Environmental Protection Agency
    Office of Policy, Planning and Evaluation
    City: Washington State: DC ZIP:
    Phone: Fax:
  • Report Details
    Number of Pages:
    Grant/Contract #:
  • How to Obtain Report

    Download report now
    Use link(s) to download or view the report

    Date Linked: 05/28/2009