The Effect of Protest Votes on the Estimates of Willingness to Pay for Use Values of Recreational Sites

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in SUMMARYSelectivity bias caused by protest responses in Contingent Valuation studies can be detected and corrected by means of sample selection models. This paper compares two methods: the Heckman 2-steps method and the full ML, applied to data on forest recreation -where WTP is elicited as a continuous variable. Either method has its own drawback: computational complexity for the ML method, susceptibility to collinearity problems for the 2-steps method. The latter problem is observed in our best fitting specification, with the ML estimator outperforming the 2-steps. In this application, overlooking the effect of protest responses would cause an upwards bias of the final estimates of WTP.Keywords: Contingent valuation, protest responses, sample selection, MLE, two-steps method JEL: C35, C51, C81, D60, H41, Q26 NON TECHNICAL SUMMARYContingent Valuation studies are often characterized by a considerable amount of protest responses, which may have an important effect on the final estimates if the protest responses are not randomly distributed across the sample. If the standard procedure of censoring protest responses is adopted, the estimates may be biased. Sample selection models can detect and -if necessary-correct selectivity bias. We apply a sample selection model to data on valuation of forest resources for recreational use, where WTP responses are obtained through a mixed dichotomous choice-open ended elicitation method. Dealing with continuous data for WTP allows us to apply the Heckman 2-steps method, and compare it to the full ML estimator. Either method has its own drawback: computational complexity for the ML method, susceptibility to collinearity problems for the 2-steps method. The latter is observed in our model. The results show that censoring protest responses in this study would lead to overestimates of the willingness to pay. CONTENTS

The Impact of Protest Responses in Choice Experiments

“…3 Protest responses have been widely debated in CV studies (Strazzera et al, 2003;Jorgensen et al, 1999, among others), showing that the identification and their later treatment may have a significant influence on the welfare estimates. Therefore, problems commonly encountered in CV related to protest responses might also be present in CE, although not much attention has been given to these issues yet in the literature.…”

“…There is no protocol or theoretical criterion for classifying responses (Boyle and Bergstrom 1999); however, the classification of all zero bids must be carefully examined to identify the legitimate zero and protest responses. To differentiate between them, previous analyses have used a set of debriefing questions that were presented to those respondents who were unwilling to pay (Meyerhoff and Liebe, 20084 , Loomis et al, 1996, Strazzera et al, 2003. Based on statements as the previously used in the literature, and presented in Table 1, real zero values and protest responses were also identified in this analysis.…”

“…Along the same line, the rest of the authors include other reasons related to the value of the good, the sense that others should pay for the program, or that they cannot afford the payment. Giraud et al (2002), Jakobsson andDragun (2001), Loomis et al (1996), Strazzera et al (2003) Once the protesters had been identified, different treatments were applied to the protest responses in the CV literature. Generally, there have been three main ways of dealing with protest zero bids (Halstead et al, 1992).…”

“…Even though there are different ways to deal with protest responses, the most common application in CV is to delete them from the sample (see Adamowicz et al, 1998;Morrison, et al, 2000). Strazzera et al (2003) argue that the rationale for removal of protest zeros is explained by Freeman´s (1986) with the following statement: "The person who refuses to state a monetary value on the grounds that it is unethical to do so or that he has an inherent right to the environmental good must be dropped from the sample when mean bids are calculated. If a person bids zero on the grounds that he had an inherent right to the good, the bid is not an indicator of his true valuation".…”

A general model for treatment of protests and no-answer responses in contingent valuation method

“…This, then, requires Heckman's (1979) two-stage procedure to estimate the sample selection type of model. Studies doing so include DalmauMatarrodona (2001) and Strazzera et al (2003). Accordingly, the full information maximum likelihood method is the most efficient method to deal with the sample selection issue (Strazzera et al, 2003).…”