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Lookup NU author(s): Riccardo Scarpa, Emeritus Professor Ken Willis
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Choice experiments are often implemented with choice sets including one alternative depicting the status quo. Utility from status quo is experienced by the respondent, while utility associated with experimentally designed hypothetical alternatives is only conjectured by respondents. The effects of explicitly accounting for such a difference in the econometric analysis of the data are often unreported, or limited to fitting a 'status quo' constant. The paper proposes a model that explicitly accounts for these effects and attempts their decomposition using data from two choice modelling exercises designed to value the provision of environmental goods. Preferences for change versus status quo are explored with standard specifications along with a less usually applied error component analysis via mixed logit. The results suggest that alternatives offering changes from status quo do not share the same preference structure as the status quo alternative, and that estimates of spread parameters in zero-mean error components can be decomposed conditional on respondents' socio-economic characteristics. It is argued that these findings have implications for practitioners and their stance towards the strategies for the econometric analysis of choice modelling data for the purpose of valuation.
Author(s): Scarpa R, Willis KG, Acutt M
Publication type: Article
Publication status: Published
Journal: Journal of Environmental Planning and Management
Year: 2007
Volume: 50
Issue: 4
Pages: 449-466
Print publication date: 01/07/2007
ISSN (print): 0964-0568
ISSN (electronic): 1360-0559
Publisher: Routledge
URL: http://dx.doi.org/10.1080/09640560701401861
DOI: 10.1080/09640560701401861
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