Comparing willingness-to-pay between residents and non-residents when correcting hypothetical bias: Case of endangered spotted seal in South Korea

http://www.sciencedirect.com/science/article/pii/S0921800912001383

Abstract: Two threads within the contingent valuation literature are potential biases created by the hypothetical nature of the method and defining the population to sample. To our knowledge, this is the first study to combine these threads, namely examining how attempting to control for hypothetical bias interacts with how the population is defined. Results indicate controlling for hypothetical bias makes the two samples, residents of Baengnyeong Island (where the spotted seal is located) and the general South Korea population, more similar than if bias is not corrected. Without correcting for bias, for example, residents' willingness-to-pay for preservation of the seal is 33% higher than the general population; however, after controlling for hypothetical bias this percent decreases to 21%.

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Highlights

► Both hypothetical bias and sample definition effect WTP for environmental goods.
► There appears to be an interaction between hypothetical bias and sample definitions.
► Controlling for hypothetical bias decreased differences between the two samples.

Fig. 1. Spotted seals in Baengnyeong Island.

Fig. 2. Location of Baengnyeong Island.

by Ju-Yeon Kim^a, , James W. Mjelde^b, ,Tae-Kyun Kim^c, ,Choong-Ki Lee^d, and Kyung-Mo Ahn^{e,  
a} International Tourism Strategy Institute, Kyung Hee University, 1, Hoegi-dong, Dongdaemun-gu, Seoul 130–701, South Korea 
^b Department of Agricultural Economics, Texas A&M University, College Station, TX, USA 
^c Department of Agricultural Economics, Kyungpook National University, Daegu, 702-701, South Korea 
^d College of Hotel and Tourism, Kyung Hee University, 1, Hoegi-dong, Dongdaemun-gu, Seoul 130–701, South Korea Corresponding author. Tel.: + 82 2 961 9430; fax: + 82 2 964 2537
^e Graduate school of Tourism, Kyung Hee University, 1, Hoegi-dong, Dongdaemun-gu, Seoul 130–701, South Korea

Ecological Economics

Volume 78, June 2012, Pages 123–131
Keywords: Willingness-to-pay; Contingent valuation method; spotted seal; Hypothetical bias; Sample selection