Mitigating the Hypothetical Bias of Willingness to Pay: A Comparison of Ex-Ante and Ex-Post Approaches

John C. Whitehead () and Todd L. Cherry

No 04-21, Working Papers from Department of Economics, Appalachian State University

Abstract: The most persistently troubling empirical result in the contingent valuation method literature is the tendency for hypothetical willingness to pay to overestimate real willingness to pay. Two approaches, ex-ante and ex-post, have been developed to mitigate or eliminate the overstatement of hypothetical willingness to pay. The ex-ante approach addresses hypothetical bias in the survey design stage while the ex-post approach addresses hypothetical bias with follow-up questions to the hypothetical willingness to pay question. We find that willingness to pay estimates are similar when either the ex-ante or ex-post approach is employed. We argue the approaches should be considered as complements and not substitutes. Employing both approaches to mitigate hypothetical bias we estimate that the annual benefits of the regional amenities associated with a green energy program in North Carolina are $186 million.

Keywords: Hypothetical Bias; Willingness to Pay; Green Energy (search for similar items in EconPapers)
JEL-codes: Q51 (search for similar items in EconPapers)
Date: 2004
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