Study on Variability of WTP Estimates by the Estimation Methods using Dichotomous Choice Contingent Valuation Data

- Journal title : Environmental and Resource Economics Review
- Volume 25, Issue 1, 2016, pp.1-25
- Publisher : Korean Resource Economics Association
- DOI : 10.15266/KEREA.2016.25.1.001

Title & Authors

Study on Variability of WTP Estimates by the Estimation Methods using Dichotomous Choice Contingent Valuation Data

Shin, Youngchul;

Shin, Youngchul;

Abstract

This study investigated the variability of WTP estimates(i.e. mean or median) with ad hoc assumptions of specific parametric probability distributions(i.e. normal, logistic, lognormal, and exponential distribution) to estimate WTP function using dichotomous choice CV data on mortality risk reduction. From the perspective of policy decision, the variability of these WTP estimates are intolerable in comparison with those of Turnbull nonparametric estimation method which is free from ad hoc distribution assumptions. The Turnbull nonparametric estimation can avoid a kind of misspecification bias due to ad hoc assumption of specific parametric distributions. Furthermore, the WTP estimates by Turnbull nonparametric estimation are robust because the similar estimates are elicited from a dichotomous choice or double dichotomous choice CV data, and the statistically significant WTP estimates can be obtained even though it is not possible by parametric estimation methods. If there are considerable variability among those WTP estimates by parametric estimation methods in condition with no criteria of model adequacy, the mean WTPs from Turnbull nonparametric estimation can be the robust estimates without ad hoc assumptions, which can avoid controversial issues in the perspective of policy decisions.

Keywords

Dichotomous choice contingent valuation;Estimation method;Parametric distribution;Turnbull nonparametric distribution;Robustness;

Language

Korean

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