Controlling for the Effects of Information in a Public Goods Discrete Choice Model

• Published in: Environmental & resource economics Vol. 63; no. 3; pp. 523 - 544
• Main Authors: Czajkowski, Mikołaj, Hanley, Nick, LaRiviere, Jacob
• Format: Journal Article
• Language: English
• Published: Dordrecht Springer Netherlands 01.03.2016; Springer Nature B.V
• Subjects: Biodiversity; Conservation; Consumers; data collection; Datasets; Economic Policy; Economics; Economics and Finance; Environmental Economics; Environmental Law/Policy/Ecojustice; Environmental Management; Heterogeneity; Information sharing; Preferences; Public good; Public goods; public services and goods; researchers; Studies; surveys; Sustainable development; Uncertainty; Valuation; variance; Willingness to pay; Information effects; Uncertainty; Discrete Choice modelling; Combined datasets; D03; Q51; C51; D83; D61
• ISSN: 0924-6460; 1573-1502
• DOI: 10.1007/s10640-014-9847-z

This paper develops a reduced form method of controlling for differences in information sets of subjects in public good discrete choice models, using stated preference data. The main contribution of our method comes from accounting for the effect of information provided during a survey on the mean and the variance of individual-specific scale parameters. In this way we incorporate both scale heterogeneity as well as observed and unobserved preference heterogeneity to investigate differences across and within information treatments. Our approach will also be useful to researchers who want to combine stated preference data sets while controlling for scale differences. We illustrate our approach using the data from a discrete choice experiment study of a biodiversity conservation program and find that the mean of individual-specific scale parameters and its variance in the sample is sensitive to the information set provided to the respondents.