FEEM working papers "Note di lavoro" series
2001 .097

The Effect of Protest Votes on the Estimates of Willingness to Pay for Use Values of Recreational Sites

Authors: Elisabetta Strazzera, Margarita Genius, Riccardo Scarpa, George Hutchinson
Series: Climate Change and Sustainable Development
Editor: Carlo Carraro
Type: Journal
Keywords: Contingent valuation,protest responses,sample selection,MLE,two-steps method
JEL n.: C35,C51,C81,D60,H41,Q26
JEL: Environmental and Resource Economics


Selectivity bias caused by protest responses in Contingent Valuation studies can be detected and corrected by means of sample selection models. This paper compares two methods: the Heckman 2-steps method and the full ML, applied to data on forest recreation - where WTP is elicited as a continuous variable. Either method has its own drawback: computational complexity for the ML method, susceptibility to collinearity problems for the 2-steps method. The latter problem is observed in our best fitting specification, with the ML estimator outperforming the 2-steps. In this application, overlooking the effect of protest responses would cause an upwards bias of the final estimates of WTP.
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