Grantee Research Project Results
2003 Progress Report: Experimental Tests of Provision Rules in Conjoint Analysis for Environmental Valuation
EPA Grant Number: R830820Title: Experimental Tests of Provision Rules in Conjoint Analysis for Environmental Valuation
Investigators: Taylor, Laura , Boyle, Kevin , Morrison, Mark
Institution: Georgia State University
EPA Project Officer: Hahn, Intaek
Project Period: May 1, 2003 through August 31, 2006
Project Period Covered by this Report: May 1, 2003 through August 31, 2004
Project Amount: $126,804
RFA: Decision-Making and Valuation for Environmental Policy (DMVEP) (2002) RFA Text | Recipients Lists
Research Category: Environmental Justice
Objective:
In recent years, there has been a movement away from using contingent valuation to estimate non-use values toward using various forms of conjoint analysis. Conjoint analysis is becoming the technique of choice in major government-sponsored valuation exercises both in the United States and abroad. This movement in part reflects concerns about possible biases associated with contingent valuation that are assumed to be less prevalent in conjoint analysis.
An important part of the contingent valuation literature was the development of an incentive- compatible provision rule that is made explicit to survey respondents. With conjoint analysis applications, however, respondents are simply asked to reveal their preferences through various evaluation tasks. Studies will describe a payment mechanism (such as a tax-price or a user-fee); however, the actual rule used to determine which of the options presented in the survey will be the option that is implemented, if any at all (the provision rule), is left unspecified.
The objective of this research project is to investigate the impacts of provision rules within conjoint choice questionnaires. Using both private and public goods, we collect conjoint choice data using 3 different provision rules and 10 different treatments. First, we use an incentive-compatible, individual provision rule (IPR) involving real payments and purchases. We then conduct a treatment using an IPR, but with hypothetical payment. Next, we use a group provision rule (GPR) in which the option that receives the greatest support in the survey is the option that is actually provided to every subject, regardless of whether this was his or her preferred option. This provision rule is not incentive compatible, but is important to understand because it mimics the likely inferred provision rule in past conjoint surveys valuing public goods. Lastly, we conduct treatments where no provision rule (NPR) is described to subjects. This treatment is consistent with all previous conjoint applications for environmental valuation. Because NPR is specified, this treatment cannot be conducted in an actual-payment scenario; only hypothetical surveys can be conducted.
The treatments we conduct allow us to:
- examine the differences in choices because of hypothetical versus real payments (i.e., explore hypothetical bias), an issue that has received considerable attention in the contingent valuation literature;
- examine the effects of moving away from incentive compatibility toward mechanisms that are more realistic (but not incentive compatible) for conjoint exercises valuing public goods;
- and examine whether the results from the treatment with no decision rule (NPR) converge on the results from the incentive compatible decision rule (IPR) or the group decision rule (GPR).
Progress Summary:
Our experimental design requires the collection of more than 1,000 survey responses. The number of surveys to be collected for each treatment is listed below under Target #, and the number of surveys collected to date is listed under # Observations.
Purchase of Private Good (t-shirts) |
Target # | # Observations |
---|---|---|
(1) IPR, Hypothetical Survey: | 120 subjects |
120 subjects |
(2) IPR, Actual Payment: | 120 subjects |
120 subjects |
(3) GPR, Hypothetical Survey: | 120 subjects |
120 subjects |
(4) NPR, Hypothetical Survey: | 120 subjects |
120 subjects |
Contribution to Public Good (tree planting in Atlanta, Georgia) |
||
(5) IPR, Hypothetical Survey: | 240 subjects |
246 subjects |
(6) IPR, Actual Payment: | 240 subjects |
120 subjects |
(7) GPR, Hypothetical Survey: | 240 subjects |
285 subjects |
(8) NPR, Hypothetical Survey: | 240 subjects |
247 subjects |
Data collection was the primary task during this project period. Undergraduate students at Georgia State University participated in the valuation experiments during regularly scheduled class times and more than 1,300 subjects have been surveyed thus far, completing the data collection for all proposed treatments except the Treatment # 2 listed above: the real-payment t-shirts survey. The resulting data have been coded by graduate student assistants at Georgia State University under the supervision of the principle investigator.
Future Activities:
We will complete real-payment t-shirt experiments during the next project period. All survey results will be coded, the data analyzed, and papers will be submitted for publication.
Journal Articles:
No journal articles submitted with this report: View all 10 publications for this projectSupplemental Keywords:
conjoint analysis, observation, nonmarket valuation, contingent valuation, survey, public good, social science, contingent valuation literature, incentive- compatible provision rule, conjoint choice, environmental valuation, incentive compatible, conjoint applications,, RFA, Economic, Social, & Behavioral Science Research Program, Scientific Discipline, Economics, decision-making, Social Science, Economics & Decision Making, contingent valuation, multi-objective decision making, policy analysis, surveys, decision analysis, cost benefit, environmental values, market valuation models, non-market valuation, standards of value, public policy, willingness to pay, conjoint analysisRelevant Websites:
http://www2.gsu.edu/~ecolot/homepage.html Exit
http://www.umaine.edu/rep/facstaff/htm_people/boyle.htm Exit
Progress and Final Reports:
Original AbstractThe perspectives, information and conclusions conveyed in research project abstracts, progress reports, final reports, journal abstracts and journal publications convey the viewpoints of the principal investigator and may not represent the views and policies of ORD and EPA. Conclusions drawn by the principal investigators have not been reviewed by the Agency.