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The International Handbook on Non-Market Environmental Valuation

The International Handbook on Non-Market Environmental Valuation

Elgar original reference

Edited by Jeff Bennett

Non-market environmental valuation (NMEV) is undergoing a period of increased growth in both application and development as a result of increasing recognition of the role of economics in environmental policy issues. Against this backdrop, The International Handbook on Non-Market Environmental Valuation brings together world leaders in the field to advance the development and application of NMEV as a tool for policy-making.

Chapter 15: Incentive and Information Properties of Preference Questions: Commentary and Extensions

Richard T. Carson and Theodore Groves

Subjects: economics and finance, environmental economics, valuation, environment, environmental economics, valuation


Richard T. Carson and Theodore Groves INTRODUCTION This chapter is both a commentary on and extension of Carson and Groves (2007) (hereafter CG) The substantial attention the paper has received has been enormously gratifying. Reception of CG has largely been positive with little if any substantive criticism directed toward it; and, there are many papers now being presented at conferences that are testing or relying on various aspects of it. Our remarks are organized into a series of short sections. The first points out that the main purpose of CG was to extend the revealed preference paradigm to cover some types of survey responses. The second notes that CG provides the theoretical foundation that some critics of contingent valuation (CV) had argued was missing. The third takes the concepts of ‘hypothetical’ and ‘hypothetical bias’ head on and argues that these concepts are, for the most part, ill-defined or simply wrong and have done enormous damage to clear and careful thinking about the nature of the response to stated preference questions. The fourth examines the properties of cheap talk which is often proposed as a way to reduce hypothetical bias. The fifth provides some elaboration on CG and the issue of how to interpret information extracted from preferences questions. The sixth poses an answer to the often asked question: is a single binary discrete choice (SBC) question always the best elicitation format for a researcher to use? The seventh provides some elaboration on the payment card elicitation format, which in recent...

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