Abstract:
Hausman (2012) “selectively” reviews the CVM literature and fails to
find progress over the 18 years since Diamond and Hausman (1994) argued
that unquantified benefits and costs are preferred to benefits and costs
quantified by CVM for policy analysis. In these comments, we provide
counter-arguments to the claims made by Hausman. We provide these
counterarguments not with the intent to convince the reader that the
debate over contingent valuation is settled but rather to urge the
community of economists to recognize that the intellectual debate over
contingent valuation is still ongoing and that plenty of work remains to
be done. We review the literature and argue that (1) hypothetical bias
raises important research questions about the incentives guiding survey
responses and preference revelation in both real and hypothetical
settings that contingent valuation can help answer, (2) the WTP-WTA gap
debate is far from settled and the debate raises important research
questions about the future design and use of benefit cost analyses of
which contingent valuation will undoubtedly be a part, and (3) CVM
studies do, in fact, tend to pass a scope test and there is little
support for the assertion that an adding up test is the definitive test
of CVM validity.
by Timothy C. Haab,
Matthew G. Interis,
Daniel R. Petrolia and
John C. Whtehead
Working Paper 13-07; 2013
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