Comparative Studies of Approaches to Eliciting Economic ValuesEPA Grant Number: R824698
Title: Comparative Studies of Approaches to Eliciting Economic Values
Investigators: Carson, Richard T. , Groves, Theodore , Machina, Mark J.
Institution: University of California - San Diego
EPA Project Officer: Chung, Serena
Project Period: October 1, 1995 through September 30, 1997
Project Amount: $265,000
RFA: Valuation and Environmental Policy (1995) RFA Text | Recipients Lists
Research Category: Environmental Justice
Description:This project will look at the properties of a number of different stated preference approaches to eliciting information useful for estimating the economic value of a change in an environmental amenity. The elicitation methods to be examined range from an open-ended question which directly elicits agents' willingness to pay for the change and a binary discrete choice question which simply asks agents whether they are willing to pay the stated cost of the change. Between these two elicitation approaches lie a number of other common approaches to be examined including payment cards, bidding games, double-bound discrete choice, and discrete choice conjoint analysis. Elicitation methods based on ratings and complete rankings will be also be considered.
The approach to be used to compare the properties of the different elicitation methods is drawn from the economics literature on incentive compatibility and mechanism design. From this perspective, it is possible to characterize an elicitation method in terms of: (1) the information it conveys to survey respondents, (2) the nature of the message space available for responses, and (3) beliefs about how those messages will be used. Traditionally, the psychology and survey research literature has only examined (2). Elicitation methods, however, which differ on any of these three features typically differ in terms of the strategic opportunities offered respondents in answering the valuation question(s). For each of the elicitation formats the explicit (or usual) assumption for (1) and (3) will be considered as well as a range of plausible alternatives. The comparative statics analysis proposed will look at how an agent's optimal response change as the characteristics of the elicitation method used change. The statistical nature of the information revealed by different elicitation methods will also be examined.
Economic valuation via stated preferences occurs in a number of different contexts. Among the those to be considered are the nature of the good: private, quasi-public where exclusion is possible, and pure public. For the later, both coercive and non-coercive payment vehicles will be examined. The possibility of uncertainty over the cost and/or benefits of the good will be also be considered, as will different forms of risk preferences.
Predictions from the model developed will be compared to the large body of existing literature on laboratory and field experiments using different elicitation methods in a wide variety of circumstances. This exercise will allow a determination of the degree to which the model has predictive validity. It is also likely to help in narrowing the set of competing assumptions. This exercise will be helpful in formulating future experiments by pointing to those tests which have the most ability to distinguish between competing hypotheses.
The results of this work should be of substantial use to researchers seeking to determine which elicitation method they should use in different situations. The results of this work should also be of substantial use to policy analysts seeking to interpret estimates from existing environmental valuation studies.