Stated preference methods and their applicability to environmental use and non-use valuations

Abstract

Stated preference (SP) methods collect data on consumer tastes by direct elicitation, in contrast to revealed preference (RP) methods that infer tastes from observed market demand behavior. Leading SP methods are choice-based conjoint (CBC) experiments and surveys, widely used in market research to forecast demand for new or modified products, and contingent valuation method (CVM) elicitations, employed by environmental economists to estimate use, non-use, or total values of non-marketed natural resources. CBC and CVM are defined and illustrated in the second section of this chapter. The main subject of this book is CVM, and since the critique of CVM in Hausman (1993), the progress, or lack of progress, in refining this method to the point where it can produce reliable, reproducible, and plausible valuations. This chapter is different, concentrating instead on SP studies of demand for ordinary consumer goods and services where actual market experience provides a proving ground for accuracy of SP methods, and drawing lessons from these market applications for use and non-use valuation of environmental goods.