Item

Contingent valuation payment cards : how many cells?

Kerr, Geoffrey N.
Date
2000-05
Type
Discussion Paper
Fields of Research
Abstract
The dichotomous choice approach to contingent valuation is extremely popular, but obtains very little information from each respondent and is therefore inefficient. Multiple-bounded dichotomous choice approaches are more efficient in theory, but theoretical gains are not always obtained in practice. The multiple-bounded dichotomous choice approach also yields internally inconsistent responses. Payment cards are another approach to improve contingent valuation efficiency. At the extremes, dichotomous choice is a two cell payment card, while open-ended CVM has an infinite number of cells. This paper reports a split sample test of the impacts on benefit estimates and efficiency arising from differences in the numbers of divisions on the payment card. Don't know responses were explicitly included to test for changes in uncertainty because of differences in cell numbers. Prior expectations were for increased cell numbers to improve efficiency, but that efficiency gains would eventually be offset by increased frequency of don't know responses and response variance as cell numbers increased. Contrary to prior expectations, parameter estimates, standard errors and benefit measures were largely invariant to cell numbers.
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