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Willingness to Pay and Sensitivity to Time Framing: A Theoretical Analysis and an Application on Car Safety

Henrik, Andersson ; James K., Hammitt ; Gunnar, Lindberg and Sundström, Kristian LU (2013) In Environmental and Resource Economics 56(3). p.437-456
Abstract
Stated preference (SP) surveys attempt to obtain monetary values for non-market goods that reflect individuals’ “true” preferences. Numerous empirical studies suggest that monetary values from SP studies are sensitive to survey design and so may not reflect respondents’ true preferences. This study examines the effect of time framing on respondents’ willingness to pay (WTP) for car safety. We explore how WTP per unit risk reduction depends on the time period over which respondents pay and face reduced risk in a theoretical model and by using data from a Swedish contingent valuation survey. Our theoretical model predicts the effect to be nontrivial in many scenarios used in empirical applications. In our empirical analysis we examine the... (More)
Stated preference (SP) surveys attempt to obtain monetary values for non-market goods that reflect individuals’ “true” preferences. Numerous empirical studies suggest that monetary values from SP studies are sensitive to survey design and so may not reflect respondents’ true preferences. This study examines the effect of time framing on respondents’ willingness to pay (WTP) for car safety. We explore how WTP per unit risk reduction depends on the time period over which respondents pay and face reduced risk in a theoretical model and by using data from a Swedish contingent valuation survey. Our theoretical model predicts the effect to be nontrivial in many scenarios used in empirical applications. In our empirical analysis we examine the sensitivity of WTP to an annual and a monthly scenario. Our theoretical model predicts the effect from the time framing to be negligible, but the empirical estimates from the annual scenario are about 70% higher than estimates from the monthly scenario. (Less)
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author
; ; and
organization
publishing date
type
Contribution to journal
publication status
published
subject
keywords
Car safety, Contingent valuation, Time frame, Willingness to pay
in
Environmental and Resource Economics
volume
56
issue
3
pages
437 - 456
publisher
Springer
external identifiers
  • wos:000326693400007
  • scopus:84887320294
ISSN
0924-6460
DOI
10.1007/s10640-013-9644-0
language
English
LU publication?
yes
id
f56ac3e2-dcba-42d8-840e-a8534506952d (old id 3810054)
date added to LUP
2016-04-01 14:11:36
date last changed
2023-12-12 01:45:27
@article{f56ac3e2-dcba-42d8-840e-a8534506952d,
  abstract     = {{Stated preference (SP) surveys attempt to obtain monetary values for non-market goods that reflect individuals’ “true” preferences. Numerous empirical studies suggest that monetary values from SP studies are sensitive to survey design and so may not reflect respondents’ true preferences. This study examines the effect of time framing on respondents’ willingness to pay (WTP) for car safety. We explore how WTP per unit risk reduction depends on the time period over which respondents pay and face reduced risk in a theoretical model and by using data from a Swedish contingent valuation survey. Our theoretical model predicts the effect to be nontrivial in many scenarios used in empirical applications. In our empirical analysis we examine the sensitivity of WTP to an annual and a monthly scenario. Our theoretical model predicts the effect from the time framing to be negligible, but the empirical estimates from the annual scenario are about 70% higher than estimates from the monthly scenario.}},
  author       = {{Henrik, Andersson and James K., Hammitt and Gunnar, Lindberg and Sundström, Kristian}},
  issn         = {{0924-6460}},
  keywords     = {{Car safety; Contingent valuation; Time frame; Willingness to pay}},
  language     = {{eng}},
  number       = {{3}},
  pages        = {{437--456}},
  publisher    = {{Springer}},
  series       = {{Environmental and Resource Economics}},
  title        = {{Willingness to Pay and Sensitivity to Time Framing: A Theoretical Analysis and an Application on Car Safety}},
  url          = {{http://dx.doi.org/10.1007/s10640-013-9644-0}},
  doi          = {{10.1007/s10640-013-9644-0}},
  volume       = {{56}},
  year         = {{2013}},
}