Resources Science ›› 2019, Vol. 41 ›› Issue (12): 2327-2341.doi: 10.18402/resci.2019.12.16

Previous Articles     Next Articles

A review of preference uncertainty in contingent valuation method

SU Hongyan, WANG Hua()   

  1. School of Environment & Natural Resources, Renmin University of China, Beijing 100872, China
  • Received:2018-04-24 Revised:2019-10-10 Online:2019-12-25 Published:2019-12-25
  • Contact: WANG Hua E-mail:huawangbeijing@qq.com

Abstract:

Economic valuation of non-market goods and services, such as improvement of environmental quality and conservation of natural resources, is a methodologically strong challenge to economists. As a primary method of economic valuation of non-market goods, the contingent valuation method, CVM, has been continuously tested and improved. One of the improvements is the change of assumption from certain preferences to uncertain preferences. This article first summarizes the reasons of uncertain preferences and potential problems caused by ignoring the uncertainty nature of preferences in contingent valuation studies. In order to have a better understanding about the issues, this article also provides a systematic review of the measurement techniques of uncertain preferences and willingness-to-pay (WTP) estimation models where the respondents’ uncertain information is incorporated. Both advantages and disadvantages of different methods are summarized. Also analyzed are the impacts of incorporating uncertain preferences on the magnitude of the estimates as well as the estimation efficiency. In general, there is a consensus among researchers on the uncertainty characteristic of respondents’ preferences. The opinion that individuals’ WTP should be a random variable with a specific distribution is generally accepted. Most of the researchers believe that information about uncertainty obtained through specific techniques is valuable for calibrating WTP estimates and more attention should be paid to the accuracy of uncertainty estimation to improve the efficiency of WTP estimation. Suggestions about future research, such as studying on heterogeneity of individuals’ uncertain preferences and improving the survey design and implementation, are provided at the end of the article.

Key words: contingent valuation method, uncertain preferences, random valuation, uncertainty measurement, willingness-to-pay estimation, review