The criterion validity of willingness to pay methods: a systematic review and meta-analysis of the evidence
Alex Lewin and
LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library
Background: The contingent valuation (CV) method is used to estimate the willingness to pay (WTP) for services and products to inform cost benefit analyses (CBA). A long-standing criticism that stated WTP estimates may be poor indicators of actual WTP, calls into question their validity and the use of such estimates for welfare evaluation, especially in the health sector. Available evidence on the validity of CV studies so far is inconclusive. We systematically reviewed the literature to (1) synthesize the evidence on the criterion validity of WTP/willingness to accept (WTA), (2) undertake a meta-analysis, pooling evidence on the extent of variation between stated and actual WTP values and, (3) explore the reasons for the variation. Methods: Eight electronic databases were searched, along with citations and reference reviews. 50 papers detailing 159 comparisons were identified and reviewed using a standard proforma. Two reviewers each were involved in the paper selection, review and data extraction. Meta-analysis was conducted using random effects models for ratios of means and percentage differences separately. Meta-bias was investigated using funnel plots. Results: Hypothetical WTP was on average 3.2 times greater than actual WTP, with a range of 0.7–11.8 and 5.7 (0.0–13.6) for ratios of means and percentage differences respectively. However, key methodological differences between surveys of hypothetical and actual values were found. In the meta-analysis, high levels of heterogeneity existed. The overall effect size for mean summaries was 1.79 (1.56–2.04) and 2.37 (1.93–2.80) for percent summaries. Regression analyses identified mixed results on the influence of the different experimental protocols on the variation between stated and actual WTP values. Results indicating publication bias did not account for differences in study design. Conclusions: The evidence on the criterion validity for CV studies is more mixed than authors are representing because substantial differences in study design between hypothetical and actual WTP/WTA surveys are not accounted for.
Keywords: contingent valuation; willingness to pay; external validity; criterion validity; hypothetical values; simulated market experiments; systematic revuew; meta-analysis (search for similar items in EconPapers)
JEL-codes: E6 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-dcm and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Published in Social Science and Medicine, 1, July, 2019, 232, pp. 238-261. ISSN: 0037-7856
Downloads: (external link)
http://eprints.lse.ac.uk/100741/ Open access version. (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:100741
Access Statistics for this paper
More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().