Scope Elasticity of Willingness to pay in Discrete Choice Experiments

Abstract Sensitivity to scope in nonmarket valuation refers the property that people are willing pay more for a higher quality or quantity of public good. Establishing significant sensitivity has been an important check validity and point contention decades stated preference research, primarily contingent valuation. Recently, researchers have begun differentiate between statistical economic significance. This paper contributes this line research by studying significance effects discrete choice experiments (DCEs) using elasticity willingness concept. We first formalize DCE context relate it Next, we review selection studies from environmental literature derive their implied estimates. find analysis as diagnostics is uncommon many assume unitary elastic employing restrictive functional form estimation. When flexible specifications employed, tendency towards inelastic sensitivity. Then, apply concept primary data on people’s preferences expanding production renewable energy Norway. estimated elasticities vary 0.13 0.58, depending attribute analyzed, model specification, geographic subsample, unit measurement key attribute. While there no strict universally applicable benchmark determining whether economically significant, deem these estimates be adequate plausible order magnitude. Implications results future provided.