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Research article2010

Estimation of WTP with point and self-selected interval responses

Ranneby, Bo; Yu, Jun

Abstract

In contingent valuation studies regarding willingness to pay (WTP) the respondents usually give an exact value as his/her WTP-value. Unfortunately, the non-response rate has a tendency to be quite high. As an attempt to reduce that rate the respondents will have a possibility to give a self-selected interval instead of a fixed value as their WTP. In this paper we will study different approaches to estimate the mean willingness to pay under these conditions. First we consider the nonparametric and a parametric approach where the intervals are treated as if the respondent gives an exact value but we cannot observe it. Next we will give a different interpretation of the intervals: Included in the respondent’s answer is information about his/her uncertainty about what would be a reasonable value of WTP. For illustration purposes we will use data from a small study in Bolln¨as municipality. In all three situations we first estimate the mean WTP and its standard error for those giving a positive answer and finally we add zero-responses

Keywords

Willingness to pay; cost-benefit analysis; self-selected interval; triangle distribution; self-consistent estimate; contingent valuation

Published in

Research report (Centre of Biostochastics)
2010, number: 2010:4, pages: 1-13
Publisher: Centre of Biostochastics