Three reasons to use annual payments in contingent valuation surveys: Convergent validity, discount rates, and mental accounting

Egan, Kevin J.; Corrigan, Jay R.; Dwyer, Daryl F.

doi:10.1016/j.jeem.2015.05.002

Cited by 74 publications

(48 citation statements)

References 47 publications

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“…Moreover, it should be familiar to them and unrestricted to conventional expenditure. We employed the residential gas bill, because the residential gas bill is the most common in Korea and is clearly related to their actual expenditure [35][36][37].…”

Section: Payment Vehiclementioning

confidence: 99%

Are Korean Households Willing to Pay a Premium for Induction Cooktops over Gas Stoves?

2017

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Korean households generally prefer to use induction cooktops rather than gas stoves because of their greater convenience and safety features. This paper tries to investigate whether Korean households are willing to pay a premium for replacing their gas stoves, which are currently common in Korea, with induction cooktops, from the perspective of convenience and safety. To this end, a contingent valuation technique was applied to assess the additional willingness to pay (WTP) a premium for using an induction cooktop rather than a gas stove. A nationwide survey of 1000 households was carried out. The results indicate that the mean additional WTP for using an induction cooktop rather than a gas stove is KRW 207 (USD 0.19) per cubic meter of residential gas. This value can be interpreted as the convenience and safety benefits to the consumer of using an induction cooktop rather than a gas stove, or residential electricity rather than residential gas for cooking. It amounts to approximately 26.7% of the average 2015 price of residential gas, which was KRW 775 (USD 0.70) per cubic meter. If the gap between the price for residential electricity and the price for residential gas is less than the WTP value, households will increase their demand for residential electricity for cooking.

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Section: Payment Vehiclementioning

confidence: 99%

Are Korean Households Willing to Pay a Premium for Induction Cooktops over Gas Stoves?

2017

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“…The medium is called the payment vehicle, and may be a tax, a fund, a donation, or an expenditure. Price of RH can be a good payment vehicle because it is well-known to most of the interviewees and is clearly related to their actual expenditure [30][31][32]. The costs and prices of RH delivered by DHS vary by location.…”

Section: Payment Vehiclementioning

confidence: 99%

The Convenience Benefits of the District Heating System over Individual Heating Systems in Korean Households

2017

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Koreans usually prefer the district heating system (DHS) to the individual heating system (IHS) because DHS can give them convenience and safety within their living environment. The Korean government thus plans to expand the DHS and requires information about the value that consumers place on the DHS over the IHS, which has not been dealt with in academic literature. This paper attempts to investigate Korean households' willingness to pay (WTP) for DHS over IHS, for residential heat (RH). To this end, the authors apply the dichotomous choice contingent valuation to assessing additional WTP for DHS using a survey of 1000 randomly selected households living in buildings with IHS. A mixture model is applied to deal with the zero WTP responses. The WTP distribution is specified as a mixture of two distributions, one with a point mass at zero and the other with full support on the positive half of the real line. The results show that the mean additional WTP for DHS-based RH over IHS-based RH is estimated to be KRW 5775 (USD 5.4) per Gcal. This value can be interpreted as the consumer's convenience benefits of DHS over IHS, and amounts to approximately 6.0% of the average price: KRW 96,510 (USD 90.4) per Gcal in 2013, for IHS-based RH. This information is useful for evaluating changes to the method used for supplying RH from IHS to DHS.

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“…One is the frequency of payment, which may be monthly, quarterly, or annual, or the payment may be a one-off payment. Following Egan et al's [47] suggestion, we use an annual payment. The other point is the duration of the payment.…”

Section: Payment Vehiclementioning

confidence: 99%

Public Acceptability of Introducing a Biogas Mandate in Korea: A Contingent Valuation Study

2016

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Biogas (BG), a renewable form of energy, can mitigate greenhouse gas emissions, unlike conventional gas. Thus, the Korean Government is considering the introduction of a BG mandate, in which the legal blend is 2% BG and 98% conventional gas (BG2), by 2020 to expand BG use. We should examine the public acceptability of the introduction, which will incur a rise in the gas price. This study attempts to assess the public's willingness to pay (WTP) for introducing the BG2 program in Korea. The WTP data were obtained from a one-and-one-half-bounded dichotomous choice contingent valuation survey of 1000 households. Because a considerable number of the respondents (63.4%) gave a zero WTP response, we applied a spike model to treat the WTP data with zero observations. The yearly mean WTP was computed as 2539 Korean won (KRW) (USD 2.5) per household for the next 10 years, which is also statistically meaningful at the 1% level. Expanding the value to the national population gives us KRW 50.7 billion (USD 49.5 million) per year. The present value of the total public WTP amounts to KRW 372.7 billion (USD 368.4 million) using a social discount rate of 5.5%. We can conclude that gas consumers in Korea are ready to shoulder some of the financial burden of expanding the use of BG.

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Three reasons to use annual payments in contingent valuation surveys: Convergent validity, discount rates, and mental accounting

Cited by 74 publications

References 47 publications

Are Korean Households Willing to Pay a Premium for Induction Cooktops over Gas Stoves?

Are Korean Households Willing to Pay a Premium for Induction Cooktops over Gas Stoves?

The Convenience Benefits of the District Heating System over Individual Heating Systems in Korean Households

Public Acceptability of Introducing a Biogas Mandate in Korea: A Contingent Valuation Study

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