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Appears in Collections:Economics Journal Articles
Peer Review Status: Refereed
Title: Using labels to investigate scope effects in stated preference methods
Author(s): Czajkowski, Mikolaj
Hanley, Nicholas
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Keywords: Scope test
Warm glow
Label effect
Choice experiment
Contingent valuation
Biodiversity valuation
National park
Biodiversity resources
Issue Date: Dec-2009
Date Deposited: 3-Apr-2013
Citation: Czajkowski M & Hanley N (2009) Using labels to investigate scope effects in stated preference methods. Environmental and Resource Economics, 44 (4), pp. 521-535.
Abstract: Insufficient sensitivity to scope (variations in the scale of the environmental good on offer) remains a major criticism of stated preference methods, and many studies fail a scope test of some sort. Across a range of existing explanations for insensitivity to scope (commodity mis-specification, embedding, warm glows) there seems to exist no clear conclusion on how to deal with the problem. This paper provides an alternative explanation for insufficient sensitivity to scope, based on re-definition of the determinants of value for environmental goods within an attributes-based choice model. In the proposed framework respondents' Willingness To Pay need depend not only on physical characteristics of a good, but may also depend on the 'label' under which the environmental good is 'sold' in the hypothetical market. To investigate this problem, a Choice Experiment study of biodiversity was conducted. We find that controlling for the effects of a label - in this case, national park designation - leads to significant increase in the scope sensitivity of welfare measures.
DOI Link: 10.1007/s10640-009-9299-z
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