Abstract
This paper presents tests of the theoretical validity of the contingent valuation (CV) method. The validity of CV is especially a concern when involving environmental goods with a predominant non-use value. One test of theoretical validity is the adding-up property that implies that a specific good should be equally valued irrespectively of it is being valued directly or built-up sequentially. In this CV study four independent sub-samples stated willingness to pay for the same composite good, or package, using different sequences. One sub-sample valued the composite good directly, while two sub-samples faced built-up sequences valuing first subsets of this composite good. A fourth sub-sample valued the composite good from a dividing-out approach, facing first the valuation of a larger multi-package. Theoretically expected sequencing effects were observed; the subset goods obtained higher values earlier in a sequence, and the dividing-out approach decreased the stated value for the composite good. Most importantly, these CV data did pass the tests of the adding-up property.
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Veisten, K., Hoen, H.F. & Strand, J. Sequencing and the Adding-up Property in Contingent Valuation of Endangered Species: Are Contingent Non-Use Values Economic Values?. Environ Resource Econ 29, 419–433 (2004). https://doi.org/10.1007/s10640-004-9458-1
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DOI: https://doi.org/10.1007/s10640-004-9458-1