What do respondents bring to contingent valuation? A comparison of monetary and labour payment vehicles

Abstract

In the contingent valuation method, both the goods being valued and the payment vehicles used to value them are mostly hypothetical. However, although numerous studies have examined the impact of experience with the good on the willingness to pay, less attention has been given to experience with the payment vehicles. This paper examines how experience with payment vehicles influence responses to a contingent valuation scenario on maintaining irrigation canals in a developing country. Specifically, the paper uses a split-sample survey to investigate the effects of experience with monetary and labour payment vehicles on the acceptance of a contingent valuation scenario, protest bids and mean willingness to pay. Using convergent validity tests, we found that the experience acquired from using both monetary and labour payment vehicles reduces the asymmetries in acceptance rates. These findings suggest that experience with payment vehicles reduces time/money response asymmetries in the contingent valuation method.

Keywords:

• contingent valuation
• payment vehicles
• numéraires
• experience

JEL codes:

• Q51
• Q56

Acknowledgements

Constructive comments on earlier versions of this paper from seminar participants at the Department of Economics, University of Gothenburg, in particular Måns Söderbom, as well as from Jim Anderson of the World Bank and from an anonymous reviewer, are gratefully acknowledged. The authors also gratefully acknowledge financial support from Sida (Swedish International Development and Cooperation Agency) to the Environmental Economics Unit of the University of Gothenburg and to the Environment for Development (EfD) initiative, from Formas through its COMMONS programme, and from Elforsk. The usual disclaimers apply.

Note

Notes

1. GHS = Ghana cedi. GHS 6 = about US$ 4, at the time of the survey in 2010.