AEM 2500 Lec 19 CV 100810 sv - Choice and (Inferred) Values...

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Choice and (Inferred) Values Choice ÍÎ Values Revealed Preference (RP) approaches involve the Revealed Preference (RP) approaches involve the estimation of values form observation of choice (behavior) in markets for related goods. – Travel Costs Hedonic Pricing – Hedonic Pricing – Household Production Models (averting costs and cost of illness) Stated Preference (SP) approaches derive values from responses to hypothetical choices from responses to hypothetical choices. – Contingent Valuation – Conjoint Analysis/Choice Experiments Validity in measurement: – Content validity (quality of the study) – Construct validity • Theoretical construct validity (do your empirical measures correspond with theoretical construct) Convergent validity (do your empirical measures correspond with other ways of measuring the same commodity) – Criterion validity (do your empirical measures correspond to an agreed upon criterion such as actual contributions)
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Contingent Valuation Contingent Valuation is a survey-based method for eliciting total economic values that people place on goods, services, and amenities. – Suggested by Ciriacy-Wantrup, 1947 – First applied by Davis, 1963 Steps in Conducting a Contingent Valuation Study (Boyle, 2003 1. Identify the change(s) in quantity or quality to be valued. 2. Identify whose values are to be estimated. 3. Select a data collection mode. Valuation Study (Boyle, 2003) 4. Statistical sampling design. 5. Design information component of the survey instrument. 6. Describe item to be valued, the method of provision, payment vehicle, decision rule, and timeframe for payment. 7. Design the contingent valuation question. – Select elicitation format – Develop questions to screen for protest and other types of misleading responses. 8. Develop auxiliary questions for inclusion in the survey instrument. – Covariates – Test validity of responses. 9. Implement the survey. 10.Conduct statistical analyses.
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Policy Issues Major air quality initiatives have cited Major air quality initiatives have cited reduce acid precipitation as a benefit of further reductions in sulfur dioxide (SO2) and nitrogen dioxides (NOx) – 1990 Clean Air Act Amendments – 2005 Clean Air Interstate Rule
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AEM 2500 Lec 19 CV 100810 sv - Choice and (Inferred) Values...

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