WTA Estimates Using the Method of Paired Comparison: Tests of Robutness

Patrucua Champ and John Loomis

Environmental & Resource Economics, 1998, vol. 12, issue 3, 375-386

Abstract: The method of paired comparison is modified to allow choices between two alternative gains so as to estimate willingness to accept (WTA) without loss aversion. The robustness of WTA values for two public goods is tested with respect to sensitivity of the WTA measure to the context of the bundle of goods used in the paired comparison exercise and to the scope (scale) of the public good project. There was no statistical difference in WTA measures for open space based on independent treatments with different contexts. One treatment involved valuing open space within a set of goods with similar value. The other treatment involved valuing open space within a choice set of goods which had lower dollar values than open space. There was a statistical difference in WTA between a permanent expansion in the bus system and a temporary expansion in the bus system. We conclude the method of paired comparison appears to be a very promising approach to elicit measures of WTA. Copyright Kluwer Academic Publishers 1998

Keywords: context effect; public goods experiment; scope test; stated preferences; willingness to accept (search for similar items in EconPapers)
Date: 1998
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DOI: 10.1023/A:1008265128762

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