Do numerical probabilities promote informed stated preference responses under inherent uncertainty? Insight from a coastal adaptation choice experiment

Christos Makriyannis (), Robert Johnston and Ewa Zawojska
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Christos Makriyannis: Suffolk University, Department of Economics

No 2022-05, Working Papers from Faculty of Economic Sciences, University of Warsaw

Abstract: Inherent outcome uncertainty within stated preference surveys is invariant across valuation scenarios. It has received relatively little attention in the environmental stated preference literature. Specifically, it is unknown whether percentage probabilities—a ubiquitous means of communicating uncertainty in questionnaires—are an effective risk communication tool. This article systematically evaluates two treatments in a discrete choice experiment survey related to coastal climate change adaptation in Connecticut, USA: one provides only raw frequencies as a risk communication tool, while the other provides implied numerical probabilities in addition to the same raw frequencies. Results from a mixed logit model and from a latent class model that controls for sociodemographic influences show that the use of percentage probabilities to communicate inherent uncertainty has no additional effect on average welfare estimates or the choice behavior of respondents. Our findings suggest that percentage probabilities may not be an impactful way to communicate inherent uncertainty in environmental stated preference questionnaires.

Keywords: flood adaptation; inherent uncertainty; discrete choice experiment; stated preference; mixed logit; risk communication; WTP-space (search for similar items in EconPapers)
JEL-codes: D61 D83 H41 Q5 Q51 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2022
New Economics Papers: this item is included in nep-agr, nep-dcm, nep-env and nep-upt
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Persistent link: https://EconPapers.repec.org/RePEc:war:wpaper:2022-05

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