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Protesting or Justifying? A Latent Class Model for Contingent Valuation with Attitudinal Data

Cunha-e-Sa, Maria Antonieta, Livia Madureira, Luis Nunes () and Vladimir Otrachshenko

FEUNL Working Paper Series from Universidade Nova de Lisboa, Faculdade de Economia

Abstract: This article develops a latent class model for estimating willingness-to-pay for public goods using simultaneously contingent valuation (CV) and attitudinal data capturing protest attitudes related to the lack of trust in public institutions providing those goods. A measure of the social cost associated with protest responses and the consequent loss in potential contributions for providing the public good is proposed. The presence of potential justification biases is further considered, that is, the possibility that for psychological reasons the response to the CV question affects the answers to the attitudinal questions. The results from our empirical application suggest that psychological factors should not be ignored in CV estimation for policy purposes, allowing for a correct identification of protest responses. JEL codes: C35, C85, Q51

New Economics Papers: this item is included in nep-ecm, nep-pbe and nep-pol
Date: 2010
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