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Scale factors and hypothetical referenda: A clarifying note

Carlsson, F and Johansson-Stenman, O (2010) In Journal of Environmental Economics and Management 59(3). p.286-292
Abstract
In this note we explore in detail the importance of, and problems associated with, correcting for variance differences between data sets obtained from hypothetical and real referenda. We show that a previous discussion in the literature rests on a problematic estimation of the relative scale factor. The implications are illustrated with data from Cummings et al. (1997) [5], as well as with simulated data. Moreover, we propose a concrete methodology for how to analyze cases where it is difficult, or even impossible, to estimate the relative scale factor due to informational limitations, such as when there is no variation of the bid. We conclude that it is valuable to be able to separate behavioral differences into variance differences and... (More)
In this note we explore in detail the importance of, and problems associated with, correcting for variance differences between data sets obtained from hypothetical and real referenda. We show that a previous discussion in the literature rests on a problematic estimation of the relative scale factor. The implications are illustrated with data from Cummings et al. (1997) [5], as well as with simulated data. Moreover, we propose a concrete methodology for how to analyze cases where it is difficult, or even impossible, to estimate the relative scale factor due to informational limitations, such as when there is no variation of the bid. We conclude that it is valuable to be able to separate behavioral differences into variance differences and parameter differences in the underlying objective function. Yet, we argue that when using the results to interpret the results of other hypothetical referenda, it is sometimes the net effect, i.e., without correction for scale differences, that matters. (C) 2010 Elsevier Inc. All rights reserved. (Less)
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author
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Hypothetical referenda, Hypothetical bias, Scale parameter, Contingent valuation
in
Journal of Environmental Economics and Management
volume
59
issue
3
pages
286 - 292
publisher
Elsevier
external identifiers
  • scopus:77950519651
ISSN
0095-0696
DOI
10.1016/j.jeem.2010.02.001
project
BECC
language
English
LU publication?
no
id
57de5d03-434d-4328-a714-8519b94f7ab7 (old id 4448851)
date added to LUP
2014-05-23 12:11:35
date last changed
2018-05-29 11:52:24
@article{57de5d03-434d-4328-a714-8519b94f7ab7,
  abstract     = {In this note we explore in detail the importance of, and problems associated with, correcting for variance differences between data sets obtained from hypothetical and real referenda. We show that a previous discussion in the literature rests on a problematic estimation of the relative scale factor. The implications are illustrated with data from Cummings et al. (1997) [5], as well as with simulated data. Moreover, we propose a concrete methodology for how to analyze cases where it is difficult, or even impossible, to estimate the relative scale factor due to informational limitations, such as when there is no variation of the bid. We conclude that it is valuable to be able to separate behavioral differences into variance differences and parameter differences in the underlying objective function. Yet, we argue that when using the results to interpret the results of other hypothetical referenda, it is sometimes the net effect, i.e., without correction for scale differences, that matters. (C) 2010 Elsevier Inc. All rights reserved.},
  author       = {Carlsson, F and Johansson-Stenman, O},
  issn         = {0095-0696},
  keyword      = {Hypothetical referenda,Hypothetical bias,Scale parameter,Contingent valuation},
  language     = {eng},
  number       = {3},
  pages        = {286--292},
  publisher    = {Elsevier},
  series       = {Journal of Environmental Economics and Management},
  title        = {Scale factors and hypothetical referenda: A clarifying note},
  url          = {http://dx.doi.org/10.1016/j.jeem.2010.02.001},
  volume       = {59},
  year         = {2010},
}