Prior knowledge, familiarity and stated policy consequentiality in contingent valuation

Katherine Needham and Nick Hanley

Journal of Environmental Economics and Policy, 2020, vol. 9, issue 1, 1-20

Abstract: Stated preference surveys are more likely to be demand revealing if the respondent views their responses as consequential i.e. the respondent cares about the policy in question, believes their response will affect the provision of the good and that they will be required to pay the stated amount. In this paper, we contribute to the growing literature on the subject by examining the influence of a respondent’s prior knowledge about the good being valued on stated policy consequentiality. We find that consistent with previous research, willingness to pay varies according to stated consequentiality; and that stated consequentiality itself varies according to a number of observables. Consequentiality and willingness to pay appear to be related on a continuum but this estimate is revised downwards for respondents with a high a priori knowledge of the good. Additionally, we enquire which observed variables influence respondents stated policy consequentiality and share our concerns that a single Likert scale question does not adequately capture a respondent’s belief over consequentiality.

Date: 2020
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DOI: 10.1080/21606544.2019.1611481

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