Adequate Responsiveness to Scope in Contingent Valuation

26 September 2012
By Dr. Kenneth Train et al.

The standard test for scope sensitivity in contingent valuation studies determines whether the response to changes in scope is statistically significant; it does not address whether the magnitude of response is adequate given the specified changes in scope. This paper examines contingent valuation studies that implemented scope tests to determine what they imply about the adequacy of response to scope. The authors find that, in the vast majority of studies, the magnitude of response cannot be assessed. Only three studies permit such an assessment: Samples and Hollyer (1990), Diamond et al. (1993) and Chapman et al. (2009). The first two papers find that responses to their surveys did not vary adequately with scope. The third study passed the standard scope test, but the authors of this paper show that the magnitude of response in the third study is inadequate by straightforward methods of assessment and cannot be explained by diminishing marginal utility or substitution. More research is needed on this issue, including wider application of adding-up tests on incremental parts, as well as the development of other methods that permit an assessment of the magnitude of response or other tests of rationality.

A revised version of this paper was published in Ecological Economics, Vol. 84, December 2012, pp. 121-128.