Economics at your fingertips  

Plausible responsiveness to scope in contingent valuation

John Whitehead ()

Ecological Economics, 2016, vol. 128, issue C, 17-22

Abstract: Plausible responsiveness to scope is a question of economic significance, in addition to statistical significance, of the scope test in contingent valuation. We briefly review the history of the scope test in order to place the current issue in the context of the BP Deepwater Horizon oil spill. As a result of the review we gain insights into how the issue of scope “adequacy” arose twenty years after it was first mentioned by the NOAA Panel on Contingent Valuation following the Exxon Valdez oil spill. We then provide a review of Desvousges, Mathews and Train (2012) who promote the adding-up test to identify inadequate responsiveness to scope adequacy. The adding-up test is a test of the construct validity of the contingent valuation method but is flawed as a measure of economic significance. We propose scope elasticity of willingness-to-pay as a measure of economic significance. A simulation suggests a likely range of elasticity estimates given linear and quadratic functional forms for the willingness-to-pay function. In order to illustrate the ease of implementation of scope elasticity within the context of the standard scope test we calculate scope elasticity with willingness-to-pay estimates from several studies, describe two studies that directly estimate scope elasticity and estimate scope elasticity with primary data from two studies. All of these empirical estimates of scope elasticity fall within the range of scope elasticity suggested by the simulation. Scope elasticity provides a practical way forward, relative to the adding up test, on the issue of economic significance of scope effects.

Keywords: Contingent valuation method; Scope test; Elasticity; Adding up test (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8) Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Plausible Responsiveness to Scope in Contingent Valuation (2016) Downloads
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:

Access Statistics for this article

Ecological Economics is currently edited by C. J. Cleveland

More articles in Ecological Economics from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

Page updated 2019-04-07
Handle: RePEc:eee:ecolec:v:128:y:2016:i:c:p:17-22