Monte Carlo Benchmarks for Discrete Response Valuation Methods

V. Smith and Ju-Chin Huang

RFF Working Paper Series from Resources for the Future

Abstract: This paper argues that the widespread belief that discrete contingent valuation (CV) questions yield substantially larger estimates of the mean (and the median) willingness to pay (WTP) for nonmarket environmental resources in comparison to estimates from open-ended CV questions is unfounded. A set of Monte Carlo experiments estimate the factors influencing the performance of WTP estimates based on discrete response models. Most of the error in the WTP estimates arises from the specification errors that are common in most of the empirical models used in the literature. These experiments suggest models based on choices where WTP is dominated by non use (or passive use) values are likely to have smaller errors than where large use values influence these decisions.

Date: 1997-02-01
New Economics Papers: this item is included in nep-dcm
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Related works:
Journal Article: Monte Carlo Benchmarks for Discrete Response Valuation Methods (1998)
Working Paper: Monte Carlo Benchmarks for Discrete Response Valuation Methods (1997)
Working Paper: Monte Carlo Benchmarks for Discrete Response Valuation Methods (1996)
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