Scandinavian Working Papers in Economics

Working Papers,
Swedish National Road & Transport Research Institute (VTI)

No 2006:2: Cognitive Ability and Scale Bias in the Contingent Valuation Method

Henrik Andersson () and Mikael Svensson ()
Additional contact information
Henrik Andersson: VTI, Postal: Dept. of Transport Economics, P.O. Box 55685, SE-102 15 Stockholm, Sweden
Mikael Svensson: Örebro University, Postal: SE-702 82 Örebro, Sweden

Abstract: This study investigates whether or not the scale bias found in contingent valuation (CVM) studies on mortality risk reductions is a result of cognitive constraints among respondents. Scale bias refers to insensitivity and non near-proportionality of the respondents' willingness to pay (WTP) to the size of the risk reduction. Two hundred Swedish students participated in an experiment where their cognitive ability was tested before they took part in a CVM-study where they were asked about their WTP to reduce bus-mortality risk. The results imply that WTP answers from respondents with a higher cognitive ability are less flawed by scale bias.

Keywords: Cognitive Ability; Contingent Valuation; Mortality Risk; Near-proportionality; Scale Bias

JEL-codes: D80; I10; Q51

31 pages, May 15, 2006

Note: This paper has been revised and has been replaced by Working Paper 2007:1.

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Published as
Henrik Andersson and Mikael Svensson, (2008), 'Cognitive Ability and Scale Bias in the Contingent Valuation Method', Environmental and Resource Economics, vol 39, no 4, pages 481-495

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