This chapter focuses on a key test of rational choice in CV studies: do estimates of WTP for environmental amenities derived from split-sample (external) tests in CV studies increase as the amount of the good (or the number of goods) increases (i.e., as scope increases), and, if so, are the WTP estimates “adequately” responsive to scope? For the 111 studies of environmental non-use and mixed use/non-use environmental amenities in our study, after fractional allocation of mixed results and appropriate weighting of studies based on common underlying data, more studies fail (54 percent of the total) than pass (46 percent). Contrary to expectations, the percentage of studies failing scope has increased over time: over the 1987–2001 period, 49 percent of the studies failed a scope test vs 59 percent for the 2001–2016 period. We also find that even the scope tests that “pass” often do not exhibit “adequate” scope sensitivity. For the 21 studies that lend themselves to appropriate quantitative analysis, nine have scope elasticities less than 0.10 and 12 have scope elasticities less than 0.2; only three have scope elasticities above 0.5. The high frequency of no or limited scope elasticities documented in this study suggests that warm glow is an important element of measured WTP for non-use environmental amenities.
James Burrows, Rebecca Newman, Jerry Genser and Jeffrey Plewes
Michael Kemp, Edward Leamer, James Burrows and Powell Dixon
This chapter presents findings from a study exploring a variety of tactics intended to enhance respondent awareness of budget constraints in answering CV questions, including methods that value a composite good and allocate a total value across different parts of the composite. The research used, as a test bed, a prominent 1995 survey concerning the prevention and remediation of marine oil spills off the central California coast (the “COS study”). Approximately 2400 California households were surveyed online in 2014. Analysis of the responses to split-sample variants of the questionnaire produced the following conclusions: (1) the study evidenced a very marked lack of sensitivity to a huge scope difference (between the COS good and a much larger composite good); (2) the composite good estimate of WTP allocated to marine oil spills was markedly smaller than the single-focus estimate; (3) sizeable proportions of respondents reported various types of cognition difficulties in their responses, and the resulting WTP estimates are sensitive to those difficulties; (4) respondents presented a single-focus COS referendum after completing a budget allocation exercise were slightly less favorable to COS than those not given the budget exercise; (5) a sizeable proportion of respondents experienced cognition difficulties with part-whole relationships; and (6) within-questionnaire “wording additions” intended to enhance budget awareness had a relatively small effect on WTP estimates.