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How Can Behavioral Economics Inform Nonmarket Valuation? An Example from the Preference Reversal Literature

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  • Jonathan E. Alevy
  • John A. List
  • Wiktor L. Adamowicz
Abstract
Psychological insights have made inroads within most areas of study in economics. One area where less advance has occurred is environmental and resource economics. In this study, we examine preference reversals over evaluation modes, in which economic values critically depend on whether a good is valued jointly with others, or in isolation. The question arises because two methods for eliciting stated preferences differ in that one presents objects together and another presents them in isolation. Our empirical evidence demonstrates the import of behavioral economics and sheds new light on the possible insensitivity of valuations to the scope of the good.

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  • Jonathan E. Alevy & John A. List & Wiktor L. Adamowicz, 2011. "How Can Behavioral Economics Inform Nonmarket Valuation? An Example from the Preference Reversal Literature," Land Economics, University of Wisconsin Press, vol. 87(3), pages 365-381.
    • Handle: RePEc:uwp:landec:v:87:y:2011:iii:1:p:365-381
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    References listed on IDEAS

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    2. Heberlein, Thomas A. & Wilson, Matthew A. & Bishop, Richard C. & Schaeffer, Nora Cate, 2005. "Rethinking the scope test as a criterion for validity in contingent valuation," Journal of Environmental Economics and Management, Elsevier, vol. 50(1), pages 1-22, July.
    3. Adamowicz, Wiktor L. & Boxall, Peter C. & Williams, Michael & Louviere, Jordan, 1995. "Stated Preference Approaches for Measuring Passive Use Values: Choice Experiments versus Contingent Valuation," Staff Paper Series 24126, University of Alberta, Department of Resource Economics and Environmental Sociology.
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    9. John A. List (ed.), 2006. "Using Experimental Methods in Environmental and Resource Economics," Books, Edward Elgar Publishing, number 4180.
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    12. John A. List, 2004. "Neoclassical Theory Versus Prospect Theory: Evidence from the Marketplace," Econometrica, Econometric Society, vol. 72(2), pages 615-625, March.
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    14. John A. List, 2002. "Preference Reversals of a Different Kind: The "More Is Less" Phenomenon," American Economic Review, American Economic Association, vol. 92(5), pages 1636-1643, December.
    15. Boxall, Peter C. & Adamowicz, Wiktor L. & Swait, Joffre & Williams, Michael & Louviere, Jordan, 1996. "A comparison of stated preference methods for environmental valuation," Ecological Economics, Elsevier, vol. 18(3), pages 243-253, September.
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    19. Slovic, Paul & Finucane, Melissa L. & Peters, Ellen & MacGregor, Donald G., 2007. "The affect heuristic," European Journal of Operational Research, Elsevier, vol. 177(3), pages 1333-1352, March.
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    22. Wiktor Adamowicz & Jonathan E. Alevy & John A. List, 2006. "Behavioural Economics and the Valuation of Non-marketed Goods and Services: The Lab, the Behavioral Anomalies and the Policymaker," Chapters, in: John A. List (ed.), Using Experimental Methods in Environmental and Resource Economics, chapter 8, Edward Elgar Publishing.
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    Cited by:

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    2. Satakhun Kosavinta & Donyaprueth Krairit & Do Ba Khang, 2017. "Decision making in the pre-development stage of residential development," Journal of Property Investment & Finance, Emerald Group Publishing Limited, vol. 35(2), pages 160-183, March.
    3. Oviedo, José L. & Caparrós, Alejandro & Ruiz-Gauna, Itziar & Campos, Pablo, 2016. "Testing convergent validity in choice experiments: Application to public recreation in Spanish stone pine and cork oak forests," Journal of Forest Economics, Elsevier, vol. 25(C), pages 130-148.
    4. Leonardo Bursztyn, 2023. "When Product Markets Become Collective Traps: The Case of Social Media," ECONtribute Discussion Papers Series 260, University of Bonn and University of Cologne, Germany.
    5. Robert J. Johnston & Kevin J. Boyle & Wiktor (Vic) Adamowicz & Jeff Bennett & Roy Brouwer & Trudy Ann Cameron & W. Michael Hanemann & Nick Hanley & Mandy Ryan & Riccardo Scarpa & Roger Tourangeau & Ch, 2017. "Contemporary Guidance for Stated Preference Studies," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 4(2), pages 319-405.
    6. Ana Faria Lopes & Gorm Kipperberg, 2020. "Diagnosing Insensitivity to Scope in Contingent Valuation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 77(1), pages 191-216, September.
    7. John List, 2021. "2021 Summary Data of Artefactual Field Experiments Published on Fieldexperiments.com," Artefactual Field Experiments 00749, The Field Experiments Website.
    8. John List, 2022. "2021 Summary Data of Natural Field Experiments Published on Fieldexperiments.com," Natural Field Experiments 00747, The Field Experiments Website.
    9. Leonardo Bursztyn & Benjamin R. Handel & Rafael Jimenez & Christopher Roth, 2023. "When Product Markets Become Collective Traps: The Case of Social Media," NBER Working Papers 31771, National Bureau of Economic Research, Inc.
    10. Oviedo, José L. & Caparrós, Alejandro, 2015. "Information and visual attention in contingent valuation and choice modeling: field and eye-tracking experiments applied to reforestations in Spain," Journal of Forest Economics, Elsevier, vol. 21(4), pages 185-204.
    11. Stachtiaris, Spiros & Drichoutis, Andreas & Klonaris, Stathis, 2011. "The “more is less” phenomenon in Contingent and Inferred valuation," MPRA Paper 29456, University Library of Munich, Germany.
    12. José Luis Pinto‐Prades & José Antonio Robles‐Zurita & Fernando‐Ignacio Sánchez‐Martínez & José María Abellán‐Perpiñán & Jorge Martínez‐Pérez, 2017. "Improving scope sensitivity in contingent valuation: Joint and separate evaluation of health states," Health Economics, John Wiley & Sons, Ltd., vol. 26(12), pages 304-318, December.
    13. John List, 2022. "Framed Field Experiments: 2021 Summary on Fieldexperiments.com," Framed Field Experiments 00752, The Field Experiments Website.

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    JEL classification:

    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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