Uncertainty in cost-benefit analysis based on referendum contingent valuation

Bibliographic Data

ID21153901
AuthorsWilliam J Vaughan (Inter-American Development Bank), Clifford S Russell (0000-0003-0324-0993, Vanderbilt University), Diego J Rodrı́guez (0000-0002-3860-6353, Inter-American Development Bank), Diego J Rodriguez (0000-0002-5198-5431), Arthur C Darling (Inter-American Development Bank)
Year2000
Volume18
Issue2
Pages125-137
Publication date2000-06-01
Open AccessNo
TypeARTICLE
VenueImpact Assessment and Project Appraisal (JOURNAL)
Journal identifiersISSN: 1461-5517 • E-ISSN: 1471-5465
PublisherInforma UK Limited (PUBLISHER • GB)
DOI10.3152/147154600781767466
OpenAlexW1968917260
LanguageEN
Citations received4
References cited13

Using contingent valuation methods (CVM) is increasingly common in project analysis. Referendum-type questions are thought to be easier to answer than the open-ended variety, but there is a downside: econometric techniques must be applied to the referendum data to infer the mean or median willingness to pay (WTP) of the sample and, thus, of the population of potential beneficiaries. This is not just a technical point as is demonstrated with data from a referendum CV study of a sewage and wastewater treatment project in Brazil. A factor of 4 separates lowest from highest central tendency estimates, ignoring the outlier that is 14 times larger than the largest of the other figures. This is ample variation to make a difference in the cost-benefit analysis. Analysts using referendum CV must be sensitive to the problems they buy into, and must decide how to deal with the uncertainty in the results

Actuarial science · Contingent valuation · Econometrics · Economics · Microeconomics · Outlier · Political science · Public economics · Referendum · Statistics · Willingness to pay · Decision-Making and Behavioral Economics · Economic and Environmental Valuation · Housing Market and Economics · Mathematics · Finance

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