Does Respondent Perception of the Status Quo Matter in Non-Market Valuation with Choice Experiments? An Application to New Zealand Freshwater Streams

Dan Marsh, Lena Mkwara and Riccardo Scarpa

Working Papers in Economics from University of Waikato

Abstract: In environmental valuation studies with stated preference methods, researchers often provide descriptions of status quo conditions which may differ from those perceived by respondents. Ignoring this difference in utility baselines may affect the magnitude of utility changes and hence bias the implied estimates of benefits from the proposed environmental policies. We investigate this issue using data from a choice experiment on a community’s willingness to pay for water quality improvements in streams. More than 60 percent of respondents perceived the description of the quality of water in streams to be better than the one we provided in our scenario. Our results show that respondents who could provide details of their perception of the status quo displayed stronger preferences for water quality improvements - hence a higher marginal willingness to pay - than their counterparts. Respondents who opted for their own status quo description displayed a higher inclination to remain in the status quo, while their counterparts displayed the contrary. We argue this might be linked to the amount of knowledge each group displayed about the status quo: a kind of reluctance to leave what one knows well.

Keywords: choice experiments; fixed status quo; people’s perceived status quo; status quo effect; willingness to pay. (search for similar items in EconPapers)
JEL-codes: C51 Q25 Q51 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2010-07-15
New Economics Papers: this item is included in nep-cbe, nep-ecm and nep-env
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://repec.its.waikato.ac.nz/wai/econwp/1004.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wai:econwp:10/04

Access Statistics for this paper

More papers in Working Papers in Economics from University of Waikato Private Bag 3105, Hamilton, New Zealand, 3240. Contact information at EDIRC.
Bibliographic data for series maintained by Geua Boe-Gibson ().