Using labels to investigate scope effects in stated preference methods

Czajkowski, M. and Hanley, N. (2009) Using labels to investigate scope effects in stated preference methods. Environmental and Resource Economics, 44, pp. 521-535. (doi: 10.1007/s10640-009-9299-z)

Abstract

Insufficient sensitivity to scope (variations in the scale of the environmental good on offer) remains a major criticism of stated preference methods, and many studies fail a scope test of some sort. Across a range of existing explanations for insensitivity to scope (commodity mis-specification, embedding, warm glows) there seems to exist no clear conclusion on how to deal with the problem. This paper provides an alternative explanation for insufficient sensitivity to scope, based on re-definition of the determinants of value for environmental goods within an attributes-based choice model. In the proposed framework respondents’ Willingness To Pay need depend not only on physical characteristics of a good, but may also depend on the ‘label’ under which the environmental good is ‘sold’ in the hypothetical market. To investigate this problem, a Choice Experiment study of biodiversity was conducted. We find that controlling for the effects of a label—in this case, national park designation—leads to significant increase in the scope sensitivity of welfare measures.

• Item Type: Articles
• Additional Information: The research was funded by Polish Ministry of Science and Higher Education and the Foundation for Polish Science.
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Hanley, Professor Nicholas
• Authors: Czajkowski, M., and Hanley, N.
• College/School: College of Medical Veterinary and Life Sciences > School of Biodiversity, One Health & Veterinary Medicine
• Journal Name: Environmental and Resource Economics
• Publisher: Springer
• ISSN: 0924-6460
• ISSN (Online): 1573-1502
• Published Online: 27 June 2009