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Handbook on Contingent Valuation

Edited by Anna Alberini and James R. Kahn

The Handbook on Contingent Valuation is unique in that it focuses on contingent valuation as a method for evaluating environmental change. It examines econometric issues, conceptual underpinnings, implementation issues as well as alternatives to contingent valuation. Anna Alberini and James Kahn have compiled a comprehensive and original reference volume containing invaluable case studies that demonstrate the implementation of contingent valuation in a wide variety of applications. Chapters include those on the history of contingent valuation, a practical guide to its implementation, the use of experimental approaches, an ecological economics perspective on contingent valuation and approaches for developing nations.
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Chapter 8: Experimental Methods for the Testing and Design of Contingent Valuation

Laura O. Taylor


Laura O. Taylor* 8.1 Introduction Experimental methods have increasingly become part of the economists’s tool-bag, and those concerned with the elicitation of values for non-priced environmental goods are no exception. In this chapter, the ways in which experimental economics may be used to enhance our understanding of the contingent valuation method and to hopefully improve our ability to estimate values for non-priced goods are explored. Particular attention will be paid to the strengths and weaknesses of early experimental work designed to validate and improve the contingent valuation (CV) method. The interested reader should also see List and Gallet (2001), Shogren (2004), and Harrison and List (2005). Experiments are a natural tool for exploring such issues because they are a means by which an individual’s economic choices may be observed, while controlling the rules, information, and institutions in which those choices are made – much as CV exercises are designed to do. As experimental methods have been applied more frequently to nonmarket valuation problems, the distinction between classical laboratory experiments, field experiments, and ‘choice experiments’ as CV surveys are sometimes termed, is becoming increasingly blurred. In the next section of this chapter, induced-value and value-elicitation experiments are reviewed and the essential features of these experiments are contrasted to the CV method. Sections 8.3 and 8.4 focus on early experimental work designed to assess the validity of CV and to improve the conduct of CV by reducing any biases thought to be present.1 Concluding comments are provided in Section 8.5. 8.2 The experimental...

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