Cognitive Ability and Scale Bias in the Contingent Valuation Method - An Analysis of Willingness to Pay to Reduce Mortality Risks

Mikael Svensson and Henrik Andersson

No 2006:7, Working Papers from Örebro University, School of Business

Abstract: This study investigates whether or not the scale bias found in contingent valuation (CVM) studies on mortality risk reductions is a result of cognitive restraints among respondents. Scale bias refers to insensitivity and non near-proportionality of the respondents' willingness to pay (WTP) to the size of the risk reduction. Two hundred Swedish students participated in an experiment where their cognitive ability was tested before they took part in a CVM-study where they were asked about their WTP to reduce bus-mortality risk. The results imply that WTP answers from respondents with a higher cognitive ability are less flawed by scale bias.

Keywords: Cognitive Ability; Contingent Valuation; Mortality Risk; Near-Proportionality; Scale Bias (search for similar items in EconPapers)
JEL-codes: D80 I10 Q51 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2006-10-26, Revised 2007-02-12
New Economics Papers: this item is included in nep-cbe and nep-hea
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Published in Environmental and Resource Economics, 2006, pages 481-495.

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:oruesi:2006_007

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