Grantee Research Project Results

Final Report: How People Respond to Contingent Valuation Questions

EPA Grant Number: R824310
Title: How People Respond to Contingent Valuation Questions
Investigators: Payne, John W. , Schkade, David A. , Desvouges, William H.
Institution: Duke University , Research Triangle Institute , The University of Texas at Austin
EPA Project Officer: Chung, Serena
Project Period: October 1, 1995 through April 30, 1998
Project Amount: $238,510
RFA: Valuation and Environmental Policy (1995) RFA Text |  Recipients Lists
Research Category: Environmental Justice

Summary/Accomplishments (Outputs/Outcomes):

How do people interpret and respond to contingent valuation (CV) questions? How are the psychological processes that lead to a CV response affected by how you ask the valuation question and the sequence in which you ask the question? How stable are expressions of environmental valuations, including willingness-to-pay (WTP) amounts, across environmental goods? Should WTP amounts be viewed as "economic values" or as an expression of an attitude that is constrained to be on a dollar scale? How do people cope with emotionally difficult tradeoffs such as degree of environmental protection versus cost? In a world where expressions of preferences are often constructed, how should such preferences be measured? These are just some of the questions examined in the research supported by Environmental Protection Agency grant number R824310, which is summarized in this Final Technical Report.

The theoretical framework for the research was that expressions of preference, e.g., CV responses, are constructed - not revealed - at the time a valuation question is asked. Consequently, statements of preference will be highly sensitive to task variables such as response mode. The empirical approach was to combine both experimental methods and the process tracing method of verbal protocol collection in the investigation of preferences across a variety of public policy and consumer domains.

The following experiments were completed. In the first experiment, respondents were asked to value a natural resource preservation plan to protect salmon stocks in the Pacific Northwest. The respondents were randomly assigned to one of four value elicitation (response) formats: dichotomous choice, open-ended willingness-to-pay, and two payment card conditions anchored by low or high amounts. One fourth of the respondents in each response mode condition provided verbal protocols while generating their judgments. Second, a study was done where each respondent used multiple response modes to value a series of five different environmental goods. The goods included visibility improvement in the Grand Canyon National Park, protection of migrating waterfowl, establishment of oil spill response centers, the reintroduction of the red wolf into the Great Smoky Mountains National Park, and the preservation of salmon stocks in the Pacific Northwest. The five response modes were (1) open-ended willingness-to-pay, and ratings of (2) importance relative to other problems in society, (3) seriousness relative to other environmental problems, (4) use value and (5) existence value. Respondents were drawn from two geographical areas, Raleigh, NC and Austin, TX. A third set of experiments asked people to choose among a variety of goods that varied in terms of attributes such as safety and cost. The attributes were varied in terms of emotional tradeoff difficulty. Finally, a series of experiments were done that examined the relationships between monetary expressions of attitudes, and other ways of expressing an attitude.

The major findings from the research include the following: First, a variety of psychological considerations and processes influence WTP amounts (e.g., fair share considerations), some of which are not consistent with the common economic assumptions about the basis of CV responses. Second, exactly how you ask the CV question matters substantially, both in terms of WTP amounts and the considerations influencing those amounts. In particular, dichotomous choice WTP amounts were significant higher than those obtained with other response modes. Third, the sequence in which a good is valued, given a set of goods to be valued, matters greatly. A good that is valued first in a sequence tends to viewed in a separate not a comparative sense, and therefore tends to be assigned a much larger WTP amount. Fourth, there is some significant stability of individual preferences among a set of environmental goods; although, the use of a WTP scale to capture such preferences is not as useful as other forms of attitude scales. Fifth, people clearly find tradeoffs between some pairs of attributes more emotionally difficult than tradeoffs between other pairs of attributes. People cope with more emotional tradeoffs by adopting lexicographic choice strategies that help avoid such tradeoffs. Sixth, people are better described as having stable attitudes, rather than stable economic values, in the domain of public policy concerns. Attitude scales often do better at reflecting those attitudes than WTP amounts.

Overall, the research findings support the constructed view of expressed preferences. Some guidelines (a "building code") for measuring constructed preferences are suggested. The focus of the guidelines is on doing more value assessments with fewer respondents. This reflects the belief that it is systematic error (i.e., cognitive process bias) rather than random error than impacts most constructed expressions of preference. The guidelines also stress the need to provide respondents with tools for thinking about values in addition to information about public policy problems and proposed solutions.

Supplemental Keywords:

RFA, Scientific Discipline, Economic, Social, & Behavioral Science Research Program, Economics & Decision Making, Economics, decision-making, Social Science, Psychology, Ecology and Ecosystems, verbal protocol methodology, hypothesis testing, valuing environmental quality, community-based, policy analysis, ecosystem valuation, community involvement, methodological research, environmental values, surveys, decision analysis, information dissemination, psychological attitudes, social psychology, valuation, contingent valuation, stated preference, environmental assets, environmental policy

Progress and Final Reports:

Original Abstract

1996

1997 Progress Report