From Exxon to BP: Has Some Number Become Better than No Number?

2012 ◽  
Vol 26 (4) ◽  
pp. 3-26 ◽  
Author(s):  
Catherine L Kling ◽  
Daniel J Phaneuf ◽  
Jinhua Zhao
Keyword(s):  
Contingent Valuation ◽  
Stated Preference ◽  
Stated Preference Methods ◽  
Academic Literature ◽  
Extensive Research Program ◽  
Validity Criteria ◽  
Direct Use ◽  
Better Than ◽  
Academic Debate ◽  
Theoretical Developments

On March 23, 1989, the Exxon Valdez ran aground in Alaska's Prince William Sound and released over 250,000 barrels of crude oil, resulting in 1300 miles of oiled shoreline. The Exxon spill ignited a debate about the appropriate compensation for damages suffered, and among economists, a debate concerning the adequacy of methods to value public goods, particularly when the good in question has limited direct use, such as the pristine natural environment of the spill region. The efficacy of stated preference methods generally, and contingent valuation in particular, is no mere academic debate. Billions of dollars are at stake. An influential symposium appearing in this journal in 1994 provided arguments for and against the credibility of these methods, and an extensive research program published in academic journals has continued to this day. This paper assesses what occurred in this academic literature between the Exxon spill and the BP disaster. We will rely on theoretical developments, neoclassical and behavioral paradigms, empirical and experimental evidence, and a clearer elucidation of validity criteria to provide a framework for readers to ponder the question of the validity of contingent valuation and, more generally, stated preference methods.

State of the Art of Contingent Valuation

2020 ◽  
Author(s):  
Tim Haab ◽  
Lynne Lewis ◽  
John Whitehead
Keyword(s):  
Contingent Valuation ◽  
Discrete Choice ◽  
Stated Preference ◽  
Revealed Preference ◽  
Choice Experiments ◽  
Discrete Choice Experiments ◽  
Actual Behavior ◽  
Stated Preference Methods ◽  
Valuation Methods ◽  
Hypothetical Scenario

The contingent valuation method (CVM) is a stated preference approach to the valuation of non-market goods. It has a 50+-year history beginning with a clever suggestion to simply ask people for their consumer surplus. The first study was conducted in the 1960s and over 10,000 studies have been conducted to date. The CVM is used to estimate the use and non-use values of changes in the environment. It is one of the more flexible valuation methods, having been applied in a large number of contexts and policies. The CVM requires construction of a hypothetical scenario that makes clear what will be received in exchange for payment. The scenario must be realistic and consequential. Economists prefer revealed preference methods for environmental valuation due to their reliance on actual behavior data. In unguarded moments, economists are quick to condemn stated preference methods due to their reliance on hypothetical behavior data. Stated preference methods should be seen as approaches to providing estimates of the value of certain changes in the allocation of environmental and natural resources for which no other method can be used. The CVM has a tortured history, having suffered slings and arrows from industry-funded critics following the Exxon Valdez and British Petroleum (BP)–Deepwater Horizon oil spills. The critics have harped on studies that fail certain tests of hypothetical bias and scope, among others. Nonetheless, CVM proponents have found that it produces similar value estimates to those estimated from revealed preference methods such as the travel cost and hedonic methods. The CVM has produced willingness to pay (WTP) estimates that exhibit internal validity. CVM research teams must have a range of capabilities. A CVM study involves survey design so that the elicited WTP estimates have face validity. Questionnaire development and data collection are skills that must be mastered. Welfare economic theory is used to guide empirical tests of theory such as the scope test. Limited dependent variable econometric methods are often used with panel data to test value models and develop estimates of WTP. The popularity of the CVM is on the wane; indeed, another name for this article could be “the rise and fall of CVM,” not because the CVM is any less useful than other valuation methods. It is because the best practice in the CVM is merging with discrete choice experiments, and researchers seem to prefer to call their approach discrete choice experiments. Nevertheless, the problems that plague discrete choice experiments are the same as those that plague contingent valuation. Discrete choice experiment–contingent valuation–stated preference researchers should continue down the same familiar path of methods development.

scholarly journals Behavioral Anomalies in Contingent Values and Actual Choices

2016 ◽  
Vol 45 (2) ◽  
pp. 246-269 ◽  
Author(s):  
Gregory L. Poe
Keyword(s):  
Contingent Valuation ◽  
Stated Preference ◽  
Contingent Valuation Method ◽  
Preference Elicitation ◽  
Stated Preferences ◽  
Stated Preference Methods ◽  
Elicitation Methods ◽  
Valuation Method ◽  
Growing Body

A growing body of literature demonstrates that many behavioral anomalies observed in stated-preference elicitation methods such as the contingent valuation method are also observed in actual choices and vice versa. This presentation furthers the argument that such parallel behaviors should be viewed as a strength of stated-preference methods. Three well-known anomalies observed in both stated preferences and actual choices are first reviewed to lay the foundation for this argument. A number of lesser-known anomalies are then presented to demonstrate the wider prevalence of parallel anomalies in stated preferences and actual choices.

scholarly journals Going along with the crowd? The importance of group effects for environmental deliberative monetary valuation

2017 ◽  
Vol 36 (70) ◽  
pp. 75-94 ◽  
Author(s):  
Andrés Mauricio Vargas ◽  
David Díaz
Keyword(s):  
Willingness To Pay ◽  
Contingent Valuation ◽  
Stated Preference ◽  
Group Discussion ◽  
Stated Preference Methods ◽  
Monetary Valuation ◽  
Split Sample ◽  
Contingent Valuation Survey ◽  
Independent Preferences ◽  
Group Effects

Deliberation is expected to enhance the validity and/or the democratic status of stated preference methods. Those objectives are challenged by the potential presence of group effects. Deference to the information publicly announced by others and social pressures to conformity hinder people's ability to express reflective and independent preferences. Through a split sample contingent valuation survey, we tested whether participating in group discussion affects willingness to pay (WTP). We also test for the presence of group effects. Participants in group discussion stated a higher WTP, and we did not find evidence of group effects. These results are favorable to the deliberative project.

Handwriting Analysis and Personality Assessment

2000 ◽  
Vol 5 (1) ◽  
pp. 44-51 ◽  
Author(s):  
Peter Greasley
Keyword(s):  
Personality Traits ◽  
Personality Assessment ◽  
Personnel Selection ◽  
Empirical Studies ◽  
Handwriting Analysis ◽  
Recruitment Process ◽  
Academic Literature ◽  
Personnel Recruitment ◽  
The Subject ◽  
Better Than

It has been estimated that graphology is used by over 80% of European companies as part of their personnel recruitment process. And yet, after over three decades of research into the validity of graphology as a means of assessing personality, we are left with a legacy of equivocal results. For every experiment that has provided evidence to show that graphologists are able to identify personality traits from features of handwriting, there are just as many to show that, under rigorously controlled conditions, graphologists perform no better than chance expectations. In light of this confusion, this paper takes a different approach to the subject by focusing on the rationale and modus operandi of graphology. When we take a closer look at the academic literature, we note that there is no discussion of the actual rules by which graphologists make their assessments of personality from handwriting samples. Examination of these rules reveals a practice founded upon analogy, symbolism, and metaphor in the absence of empirical studies that have established the associations between particular features of handwriting and personality traits proposed by graphologists. These rules guide both popular graphology and that practiced by professional graphologists in personnel selection.

scholarly journals Households' valuation of power outages in major cities of Ethiopia: An application of stated preference methods

2021 ◽  
pp. 105527
Author(s):  
Tensay Hadush Meles ◽  
Alemu Mekonnen ◽  
Abebe D. Beyene ◽  
Sied Hassen ◽  
Subhrendu K. Pattanayak ◽  
...  
Keyword(s):  
Stated Preference ◽  
Power Outages ◽  
Stated Preference Methods

Economics and the Endangered Species Act

2021 ◽  
Author(s):  
Joe Kerkvliet
Keyword(s):  
Endangered Species ◽  
Economic Analysis ◽  
Stated Preference ◽  
Species Conservation ◽  
Endangered Species Act ◽  
Future Research ◽  
Economic Science ◽  
Economic Costs ◽  
Cost Estimates ◽  
Stated Preference Methods

Economics plays strong roles in the design, implementation, and evaluation of the Endangered Species Act (ESA). First, the ESA’s language allows for economic analysis of critical habitat designations, recovery plan implementations, listing postponements, and the design of habitat-conservation plans. Extensive administrative changes to the ESA in the 1990s were designed to reduce economic costs and to elicit landowners’ cooperation. These reforms were partly motivated and guided by economic analysis. Second, economic analysis plays a role in providing credible estimates of the economic costs of ESA implementation. Cost estimates are highly variable and likely to depend on species’ characteristics and the effectiveness of recovery programs. Emerging evidence suggests that the 1990 reforms are reducing costs and increasing effectiveness. Third, economic science contributes to estimation of benefits. Because of the “public goods” nature of nearly all ecosystem and species conservation efforts, estimates must be based on stated preference methods. This use leads to difficulties in establishing the authenticity of benefits estimates. Also, research suggests that benefits estimates are highly sensitive to the spatial nature of the market (beneficiaries’ geographic locations). Future research needs to tackle both authenticity and spatial issues. Fourth, benefit–cost analysis (BCA) is required by law to inform many resource decisions affecting ecosystem and species conservation. Four illustrative BCAs show that whether benefits exceed costs is highly dependent on the authenticity of benefits based on stated preference methods and assumptions about the spatial nature of the market. Substantial uncertainty accompanies both benefit and cost estimates.

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