External validity of contingent valuation

External validity of contingent valuation: comparing hypothetical and real payments

Whilst willingness to pay (WTP) is increasingly used in economics to value benefits, questions remain concerning its external validity, i.e. do hypothetical responses match actual responses? We present results from two within sample field tests (Thailand and Scotland). Our Thailand experiment suggests that whilst Hypothetical No responses are always a No, Hypothetical Yes responses exceed Actual Yes responses. Certainty calibrations (verbal and numerical response scales) minimise hypothetical-actual discrepancies offering a useful solution. Failure to adjust may overstate monetary measures of value, and lead to inaccurate policy recommendations. In a follow-up study conducted in Scotland, qualitative investigation is currently taking place into why people do not behave in reality as they state in contingent valuation surveys.

HERU researchers involved in this research project: Mandy Ryan, Sebastian Heidenreich

External collaborators: J Cairns (Department of Health Services Research and Policy, London School of Hygiene and Tropical Medicine), S Jareinpituk (Department of Dental Public health, Mahidol University), E Mentzakis (Economics Department, University of Southampton) D Glynn (University of York) and C Bond (Academic Primary Care, University of Aberdeen)

Publications

Ryan, M., Mentzakis, E., Jareinpituk, S. and Cairns, J. (2017) 'External validity of contingent valuation: comparing hypothetical and actual payments', Health Economics, 26(11), 1467-1473.

Presentations

Ryan, M., Jareinpituk, S. and Cairns J. (2007) 'Testing the external validity of contingent valuation: a field experiment comparing hypothetical and real payments', International Health Economics Association 6th World Congress, Copenhagen, Denmark, July 2007.

Ryan, M., Mentzakis, E., Jareinpituk, S. and Cairns, J. (2013) 'External validity of contingent valuation: a field experiment comparing hypothetical and real payments', International Health Economic Association (iHEA) World Congress., Sydney, July 2013.

Ryan, M. (2013) 'Testing the external validity of contingent valuation: a field experiment comparing hypothetical and real payments', Centre for Health Economics Seminar, University of Manchester, University of Manchester, October 2013.