A Meta-Analysis of Hypothetical
Bias in Stated Preference Valuation
James
J. Murphy
P. Geoffrey Allen
Thomas H. Stevens
Darryl Weatherhead
Environmental
and Resource Economics
2005, 30:313-325
Click here to download paper
(pdf)
Outline
Abstract
Individuals are widely believed to overstate their economic valuation
of a good by a factor of two or three. This paper reports the results
of a meta-analysis of hypothetical bias in 28 stated preference
valuation studies that report monetary willingness-to-pay and that
used the same mechanism for eliciting both hypothetical and actual
values. The papers generated 83 observations with a median value
of the ratio of hypothetical to actual value of 1.35, and the distribution
has severe positive skewness. Since a comprehensive theory of hypothetical
bias has not been developed, we use a set of explanatory variables
based on issues that have been investigated in previous research.
We find that a choice-based elicitation mechanism is important in
reducing bias, though an insufficient number of studies and confounding
with other variables prevents us from characterizing individual
mechanisms. We provide some evidence that the use of student subjects
may be a source of bias, but this variable is highly correlated
with group experimental settings and no firm conclusions can be
drawn. There is some weak evidence that bias increases when public
goods are being valued, and that some calibration methods are effective
at reducing bias. Results are quite sensitive to model specification,
which will remain a problem until a comprehensive theory of hypothetical
bias is developed.
Revisiting the data and estimation in List and
Gallet (2000)
List and Gallet (2000) published the first meta-analysis of hypothetical
bias in stated values. Their Table I summarizes the data used in
the analysis. Variations of this table appear in three other articles.
Because there are a number of typos and coding errors in this table,
we felt it might be useful to document these. Click
here to download (467KB pdf file) a brief comment on List and
Gallet that outlines some important issues in List and Gallet.
Tables
Below are some tables that were omitted from our journal article.
Data
Below is the data file used in the analysis:
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