A Willingness To Pay survey for parking spaces (see a post by Martin July 25th) would be expected to perform reasonably well since respondents are likely to be familiar with parking spots; their benefits, which accrue mainly to the consumer; and, since there is already a private market for parking spots, to hold an informed reference price as a guideline. But when these conditions hold a willingness to pay survey isn't really required - preferences revealed in the private market provide ample information to infer the market price for parking spots.
The unique contribution that Willingness to Pay surveys (and other stated preference techniques such as Willingness to Accept and Choice Experiments) make is in putting a money figure on passive-use values, such as the value I receive from the knowledge that there are 1600 pandas in the wild. The fact that the World Wildlife Federation receives significant donations to protect these 1600 bears, which most of us will never get a chance to see, reveals that existence values are manifest as real and important economic preferences. One indication of how great existence values for pandas are is the elaborate nature of the resources that are deployed to attract donations: http://www.chase.com/ccp/index.jsp?pg_name=ccpmapp/card_acquisitions/unsolicited/page/PFSCreditCardDetails&sourcecode=6W72&mkid=6W5L) Policy makers cannot afford to ignore passive-use values.
The trouble is that there is no means of validating the findings of stated preference valuations. We know that the existence values of pandas are at least the amount that has been donated to preserve them, but there are certainly free-riders who derive a benefit from pandas but have never paid to preserve them. Likewise, there are certainly those who use stated preference questionnaires as an opportunity to show their support for pandas by exaggerating the benefit they derive e.g. stating WTP as infinite; or $1,000,000; or possibly $100 - we just don't know.
Because, by definition, existence values are not related to use, they cannot have a direct material impact on the way people live their lives. Pandas becoming extinct would only change my world by making me feel bad. It should come as no surprise then that Stated Preference techniques are predominantly employed in domains where emotions play a very strong role e.g. health, cultural, and environmental economics. Kahneman, Ritov and Schkade (1999) http://www.springerlink.com/content/u232267854514u6m/
argue thoroughly convincingly that dollar responses to questions of existence value are simply attitude expressions applied to some arbitrary money scale. The result they infer from this is that responses are extremely fragile and should not be inferred as a meaningful reflection of the benefit respondents receive.
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