Binary choice valuation studies with heteregeneous preferences ragarding the program being valued

Abstract

We investigate the effect of respondentsŽheterogeneous preferences regarding the good to be valued in binary-choice contingent valuation studies. This is especially important when the valuation options give rise to both highly negative and highly positive attitudes. The survey design employs questionnaires which include separate items for willingness to favor and willingness to contribute in monetary terms to the provision of the good. In light of our analysis, eliciting respondentsŽdifferent preferences for the project first, without monetary considerations, would improve the WTP estimates as welfare measures. Our results also suggest that nonparametric estimation could offer another solution for accounting for preference heterogeneity. Nonparametric estimation is less sensitive to those "no" responses which are in fact not intended to reflect the respondentsŽWTP as such but merely to express their dislike for the good at issue.