Exploring a Budget Context for Contingent Valuation Estimates

Scope insensitivity in contingent valuation of complex environmental amenities

“…Several studies have reported that respondents to CV surveys have stated the same WTP for goods that differed largely in scope or inclusiveness, when CV was applied to measure passive-use values (Boyle et al, 1994;Diamond et al, 1993;Kahneman, 1986;Kahneman and Knetsch, 1992;Kemp and Maxwell, 1993;McFadden and Leonard, 1993). 1 Insensitivity to scope conflicts with the rational choice behaviour assumed for agents in neo-classical economic theory.…”

(How) Can we value health, safety and the environment?

“…Hence there is a danger that each separate study will result in each beneWt being given greater weight than it would receive in the context of all of the other possible beneWts and the many other sources of welfare in normal daily life. 10 10 Kemp and Maxwell (1993) provide a dramatic illustration of this: respondents who were asked about their WTP to protect against oil spills oV the coast of Alaska gave an average response of $85 when asked about this issue in isolation; when it was presented as a component of a wider programme of public goods, the average WTP was 29 cents. Second, the focus on changes and their coding as gains and losses may contribute substantially to the disparity between WTP and WTA.…”

Value, Externalities, and the Boundaries of the Market

“…When it comes to unique environmental goods, the more the respondent has the option of paying to save, the more she will express a willingness to pay an ever greater amount to save that ever‐expanding group. And, crucially, she will do so even to the point where those amounts vastly exceed her income (Kemp and Maxwell 1993). The same would likely be true of unique non‐environmental goods, such as Cezannes or heritage buildings or (for those who object) national flags.…”