A Meta-analysis of Hypothetical Bias in Stated Preference Valuation
[ABSTRACT READ IN FULL at the IDEAS RePEc article record, which prints the publisher abstract entire; full text not read, the published article being paywalled, and the 2003 University of Massachusetts Amherst working-paper version was not read either] Murphy, J. J., Allen, P. G., Stevens, T. H., & Weatherhead, D. (2005). 'A Meta-analysis of Hypothetical Bias in Stated Preference Valuation.' Environmental and Resource Economics, 30(3), 313-325. doi:10.1007/s10640-004-3332-z. The stated-against-measured gap, properly. In their words: 'Individuals are widely believed to overstate their economic valuation of a good by a factor of two or three. This paper reports the results of a meta-analysis of hypothetical bias in 28 stated preference valuation studies that report monetary willingness-to-pay and used the same mechanism for eliciting both hypothetical and actual values. The papers generated 83 observations with a median ratio of hypothetical to actual value of only 1.35, and the distribution has severe positive skewness.' The word only is theirs and it is the point: the received wisdom is a factor of two or three, the pooled median is 1.35. They add that a choice-based elicitation mechanism is important in reducing bias, that there is some weak evidence that bias increases when public goods are being valued, that the student-subject variable is confounded with group settings so firm conclusions cannot be drawn, and that 'results are quite sensitive to model specification, which will remain a problem until a comprehensive theory of hypothetical bias is developed.' Carry the 1.35 with the skew and that caveat, and do not convert a median into a law.
[ABSTRACT READ IN FULL at the IDEAS RePEc article record, which prints the publisher abstract entire; full text not read, the published article being paywalled, and the 2003 University of Massachusetts Amherst working-paper version was not read either] Murphy, J. J., Allen, P. G., Stevens, T. H., & Weatherhead, D. (2005). 'A Meta-analysis of Hypothetical Bias in Stated Preference Valuation.' Environmental and Resource Economics, 30(3), 313-325. doi:10.1007/s10640-004-3332-z. The stated-against-measured gap, properly. In their words: 'Individuals are widely believed to overstate their economic valuation of a good by a factor of two or three. This paper reports the results of a meta-analysis of hypothetical bias in 28 stated preference valuation studies that report monetary willingness-to-pay and used the same mechanism for eliciting both hypothetical and actual values. The papers generated 83 observations with a median ratio of hypothetical to actual value of only 1.35, and the distribution has severe positive skewness.' The word only is theirs and it is the point: the received wisdom is a factor of two or three, the pooled median is 1.35. They add that a choice-based elicitation mechanism is important in reducing bias, that there is some weak evidence that bias increases when public goods are being valued, that the student-subject variable is confounded with group settings so firm conclusions cannot be drawn, and that 'results are quite sensitive to model specification, which will remain a problem until a comprehensive theory of hypothetical bias is developed.' Carry the 1.35 with the skew and that caveat, and do not convert a median into a law.
Written from the aBSTRACT READ IN FULL at the IDEAS RePEc article record, which prints the publisher abstract entire; full text not read, the published article being paywalled, and the 2003 University of Massachusetts Amherst working-paper version was not read either.
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Murphy, J. J., Allen, P. G., Stevens, T. H., & Weatherhead, D. (2005). A Meta-analysis of Hypothetical Bias in Stated Preference Valuation. Environmental and Resource Economics, 30(3), 313-325. doi:10.1007/s10640-004-3332-z