Abstract
We examined sequence effects on willingness-to-pay (WTP) when people evaluate a series of environmental goods. Each respondent evaluated five different environmental goods using WTP and four evaluative attitude ratings. There was a strong sequence effect: WTP was much larger for the first good than for goods evaluated afterward. Also, total WTP for the bundle of five goods depended on which good was evaluated first: the more highly valued the first good, the higher the total WTP for the bundle. The attitude ratings are shown to be more statistically efficient than WTP in measuring the relative importance of different environmental goods.
Similar content being viewed by others
References
Arrow, K. J. (1982). “Risk Perception in Psychology and Economics,” Economic Inquiry 20, 1–9.
Arrow, K. J., P. R. Solow, E. E. Portney, R. Leamer, R. Radner, and H. Schuman. (1993). “Report of the NOAA panel on contingent valuation.” Federal Register, 58, 4601 (Jan. 15).
Bettman, J. R., M. F. Luce, and J. W. Payne. (1998). “Constructive Consumer Choice Processes,” Journal of Consumer Research 25, 187–217.
Boyle, K. J., M. P. Welsh, and R. C. Bishop. (1990). “The Role of Question Order and Respondent Experience in Contingent-Valuation Studies,” Journal of Enironmental Economics and Management 25, 80–99.
Brookshire, D. S., R. C. d'Arge, W. D. Schulze, and M. A. Thayer. (1981). “Experiments in Valuing Public Goods.” In V. K. Smith ed., Advances in Applied Microeconomics. Greenwich, CT: JAI Press.
Carson, R., N. E. Flores, and W. M. Hanemann. (1998). “Sequencing and Valuing Public Goods,” Journal of Environmental Economics and Management 36, 314–323.
Carson, R. T., N. E. Flores, and N. F. Meade. (1996). Contingent Valuation: Controversies and Evidence. Unpublished manuscript. San Diego: Department of Economics, University of California.
Carson, R. T., and R. C. Mitchell. (1995). “Sequencing and Nesting in Contingent Valuation Surveys,” Journal of Environmental Economics and Management 28, 155–173.
Diamond, P. (1996). “Testing the Internal Consistency of Contingent Valuation Surveys,” Journal of Environmental Economics and Management 30, 337–347.
Ebert, U. (1998). “Evaluation of Nonmarket Goods: Recovering Unconditional Preferences,” American Journal of Agricultural Economics 80, 241–254.
Freeman III, A. M. (1993). The Measurement of Environmental and Resource Values: Theory and Methods. Washington, D.C.: Resources for the Future.
Goldstein, W. M., and H. J. Einhorn. (1987). “Expression Theory and the Preference Reversal Phenomena,” Psychological Review 94, 236–254.
Gregory, R., S. Lichtenstein, and P. Slovic. (1993). “Valuing Environmental Resources: A Constructive Approach,” Journal of Risk and Uncertainty 7, 177–197.
Hausman, J. A. (ed). (1993). Contingent Valuation: A Critical Assessment. Amsterdam, The Netherlands: North-Holland.
Hoehn, J. P., and J. B. Loomis. (1993). “Substitution Effects in the Valuation of Multiple Environmental Programs,” Journal of Environmental Economics and Management 25, 56–75.
Hoehn, J. P., and A. Randall. (1987). “Too Many Proposals Pass the Benefit Cost Test,” American Economic Review 79, 544–551.
Just, R. E., D. L. Hueth, and A. Schmitz. (1982). Applied Welfare Economics and Public Policy. Englewood Cliffs, N.J.: Prentice-Hall.
Kahneman, D., and D. Lovallo. (1993). “Timid Decisions and Bold Forecasts: A Cognitive Perspective on Risk Taking,” Management Science 39, 17–31.
Kahneman, D., and I. Ritov. (1994). “Determinants of Stated Willingness to Pay for Public Goods: A Study in the Headline Method,” Journal of Risk and Uncertainty 9, 5–38.
Kahneman, D., I. Ritov, and D. Schkade. (1999). “Economic Preferences or Attitude Expressions? An Analysis of Dollar Responses to Public Issues,” Journal of Risk and Uncertainty 19, 220–242.
Kahneman, D., D. Schkade, I. Ritov, and C. Sunstein. (1999). Reversals of Judgment: The Effect of Cross-Category Comparisons on Intendedly Absolute Responses. Unpublished manuscript. Princeton University.
Kahneman, D., D. Schkade, and C. Sunstein. (1998). “Shared Outrage and Erratic Awards: The Psychology of Punitive Damages,” Journal of Risk and Uncertainty 16, 49–86.
Loomis, J., A. Gonzalez-Caban, and R. Gregory. (1994). “Do Reminders of Substitutes and Budget Constraints Influence Contingent Valuation Estimates?” Land Economics 70, 499–506.
Magat, W. A., W. K. Viscusi, and J. Huber. (1988). “Paired Comparison and Contingent Valuation Approaches to Morbidity Risk Valuation,” Journal of Environmental Economics and Management 15, 395–411.
Magat, W. A., J. Huber, and W. K. Viscusi. (2000). “An Iterative Choice Approach to Valuing Clean Lakes, Rivers, and Streams,” Journal of Risk and Uncertainty 21.
Marks, L. E., and D. Algorn. (1998). “Psychophysical Scaling.” In M. H. Birnbaum ed., Measurement, Judgment, and Decision Making. San Diego, CA: Academic Press.
McFadden, D. (1994). “Contingent Valuation and Social Choice,” American Journal of Agricultural Economics 76, 689–708.
Mitchell, R. C., and R. T. Carson. (1989). Using Surveys to Value Public Goods: The Contingent Valuation Method. Washington, DC: Resources for the Future.
Moore, D. (1999). “Order Effects in Preference Judgments: Evidence for Context-Dependence in the Generation of Preferences,” Organizational Behavior and Human Decision Processes, 78, 146–165.
Neill, H. R. (1995). “The Context for Substitutes in CVM Studies: Some Empirical Observations,” Journal of Environmental Economics and Management 29, 393–397.
Norman, D. A. (1988). The Psychology of Everyday Things. New York: Basic Books.
Payne, J. W., J. R. Bettman, and E. J. Johnson. (1992). “Behavioral Decision Research: A Constructive Processing Perspective,” Annual Review of Psychology 43, 87–131.
Payne, J. W., J. R. Bettman, and D. Schkade. (1999). “Measuring Constructed Preferences: Towards a Building Code,” Journal of Risk and Uncertainty 19, 243–270.
Petty, R. E., D. T. Wegener, and L. R. Fabrigar. (1997). “Attitudes and Attitude Change,” Annual Review of Psychology 48, 609–647.
Schkade, D., and J. W. Payne. (1994). “How People Respond to Contingent Valuation Questions: A Verbal Protocol Analysis of Willingness to Pay for an Environmental Regulation,” Journal of Environmental Economics and Management 26, 88–109.
Schkade, D., J. W. Payne, W. Desvousges, and Fries. (2000). A Verbal Protocol Analysis of the Willingness-to-Pay for the Preserviation of a Natural Resource: The Problem of Question Format. Unpublished manuscript. Austin: Department of Management, University of Texas.
Schwarz, N. (1999). “Self-Reports: How the Questions Shape the Answers,” American Psychologist 54, 93–105.
Slovic, P. (1995). “The Construction of Preferences,” American Psychologist 50, 364–371.
Viscusi, W. K., W. A. Magat, and J. Huber. (1987). “An Investigation of the Rationality of Consumer Valuation of Multiple Health Risks,” The Rand Journal of Economics 18, 465–479.
Author information
Authors and Affiliations
Rights and permissions
About this article
Cite this article
Payne, J.W., Schkade, D.A., Desvousges, W.H. et al. Valuation of Multiple Environmental Programs. Journal of Risk and Uncertainty 21, 95–115 (2000). https://doi.org/10.1023/A:1026573527618
Issue Date:
DOI: https://doi.org/10.1023/A:1026573527618