Environmental Economics

Comment on Desvousges, Mathews and Train (2015) continued: theory

Desvousges, Mathews and Train (2015) [DMT] find that their contingent valuation method (CVM) survey does not pass the adding up test. In a previous post (Whitehead, Sept. 20, 2016) I examined the data used by Desvousges, Mathews and Train (2015) and find that "it is ... not clear if [the data] passes the most basic validity test in contingent valuation over 89% of the range of bids."

There are other things wrong with the paper (see also cognitive burden, cost). DMT says this about what we said about the theory:

Haab et al. (2013, 10) state that the adding-up test imposes additional structure on preferences beyond that imposed by the scope test and that the additional structure is unnecessary. For the scope test, they say, “A simple theoretical model of WTP, a difference in expenditure functions with changes in quality or quantity, can be used to show that WTP is nondecreasing in quality or quantity (Whitehead, Haab, and Huang 1998).” The same theoretical model, with differences in expenditure functions (as described above), is all that is needed to show the adding-up condition. The assumptions that Whitehead, Haab, and Huang (1998) use to show nonnegative scope effects for the scope test are sufficient to show the adding-up condition for the adding-up test. No additional assumptions or structure is required.

The basic scope test theory defines WTP(1) and WTP(1+2) and shows that WTP(1+2) > WTP(1). The difference is WTP(2). Estimating WTP(2) is where the additional structure on preferences must be imposed during the survey. If one tries to elicit WTP(1) and WTP(2) independently, as in DMT (2015), it is likely that WTP(1) + WTP(2) > WTP(1+2) due to substitution and income effects, which is the result in DMT (2015).

In order to accurately elicit WTP(2) one would need to describe the provision of WTP(1) and how its provision has reduced the income/budget of the survey respondent. WTP(2) is actually WTP(2|1, B-A) where 2|1 means 2 given the provision of 1, B is the budget for environmental goods and A is the amount of money taken from the respondent to pay for provision of 1 [1]. This counterfactual imposes additional cognitive burden and I'm pessimistic that a CVM survey (or a discrete choice experiment) can demonstrate adding up (it hasn't been done in lab experiments with real money and market goods). 

DMT (2015) don't describe B-A to survey respondents but conduct a simulation to show that income effects are small. The simulation isn't convincing because respondents may have a budget for environmental goods, Y > B where Y is income, and the payment for good 1 (i.e., A) takes a larger percentage from their budget than it doesn't from their income. The amount A might use up their environmental goods budget leading to WTP(2|1, B-A) < WTP(2, B). I can't find any evidence that DMT (2015) attempt to describe 2|1 to respondents to deal with potential substitution effects.

Finally, if the theory in Whitehead, Haab and Huang (1998), which isn't original with us, is sufficient for an adding up test then Diamond (1996) would not have been necessary.

Note:

[1] This description of WTP(2|1, B-A) is in Whitehead (2016).  

References

Desvousges, William, Kristy Mathews, and Kenneth Train. “An Adding Up Test on Contingent Valuations of River and Lake Quality.” Land Economics 91(2015): 556-571. http://le.uwpress.org/content/91/3/556.refs

Diamond, Peter. "Testing the internal consistency of contingent valuation surveys." Journal of Environmental Economics and Management 30, no. 3 (1996): 337-347.

Whitehead, John C. "Plausible responsiveness to scope in contingent valuation." Ecological Economics 128 (2016); 17-22. http://www.sciencedirect.com/science/article/pii/S0921800916302890

Whitehead, John C., "A comment on '“An Adding Up Test on Contingent Valuations of River and Lake Quality,'” The Environmental Economics Blog, September 20, 2016. http://www.env-econ.net/2016/09/a-comment-on-an-adding-up-test-on-contingent-valuations-of-river-and-lake-quality.html

Whitehead, John C., Timothy C. Haab, and Ju-Chin Huang. "Part-whole bias in contingent valuation: Will scope effects be detected with inexpensive survey methods?." Southern Economic Journal (1998): 160-168.

New working paper on the Deepwater Horizon oil spill

Lost Recreational Value from the Deepwater Horizon Oil Spill Using Revealed and Stated Preference Data

John C. Whitehead, Tim Haab, Sherry Larkin, John Loomis, Sergio Alvarez and Andrew Ropicki

No 16-16, Working Papers from Department of Economics, Appalachian State University

Abstract: The lost recreational use values from the BP/Deepwater Horizon oil spill in the Gulf of Mexico were estimated from cancelled recreational trips to Northwest Florida. The impacts were calculated using the travel cost method for a single site with primary data collected from an online survey conducted after the spill. The data were collected in August and September 2011 with respondents residing in U.S. states that constitute the primary market for coastal tourism to Northwest Florida. The survey gathered information from respondents on their recreational visits to Northwest Florida, including detailed information on their past trips and the number of trips cancelled to the study region due to the oil spill. The empirical analysis involves the estimation of random parameters negative binomial count data demand functions. Using these models we find significant preference heterogeneity surrounding the effects of the oil spill. Aggregate damages are estimated to be $207 million. Key Words: BP/Deepwater Horizon oil spill,travel cost method,cancelled trips

Date: 2016

Downloads: (external link)
http://econ.appstate.edu/RePEc/pdf/wp1616.pdf (application/pdf)

via econpapers.repec.org

New working paper on the demand for seafood safety

Convergent validity of stated preference methods to estimate willingness-to-pay for seafood traceability: The case of Gulf of Mexico oysters

John C. Whitehead, O. Ashton Morgan and William L. Huth

No 16-15, Working Papers from Department of Economics, Appalachian State University

Abstract: In this study we compare willingness to pay for a seafood traceability system form contingent behavior demand and contingent valuation referendum vote models using data from a survey of Gulf of Mexico oyster consumers following the BP oil spill in 2010. We estimate a fixed effects model of oyster demand using contingent behavior data and find that a traceability program increases demand and consumer surplus. We estimate a referendum model for the seafood traceability program using contingent valuation data. We find that welfare estimates from the contingent behavior and contingent valuation methods are convergent valid under certain conditions. 

Date: 2016

Downloads: (external link)
http://econ.appstate.edu/RePEc/pdf/wp1615.pdf (application/pdf)

via econpapers.repec.org

"Gelman on [criticizing published research on]... Social Media"

I read Andrew Gelman's post the other day and was wondering what to excerpt. Alex Tabarrok figured it out for me:

This Andrew Gelman post on the replication crisis and the role that blogs have played in generating that crisis starts off slow but just builds and builds until by the end it’s like holy rolling thunder. Here is just one bit:

Fiske is annoyed with social media, and I can understand that. She’s sitting at the top of traditional media. She can publish an article in the APS Observer and get all this discussion without having to go through peer review; she has the power to approve articles for the prestigious Proceedings of the National Academy of Sciences; work by herself and har colleagues is featured in national newspapers, TV, radio, and even Ted talks, or so I’ve heard. Top-down media are Susan Fiske’s friend. Social media, though, she has no control over. That’s must be frustrating, and as a successful practioner of traditional media myself (yes, I too have published in scholarly journals), I too can get annoyed when newcomers circumvent the traditional channels of publication. People such as Fiske and myself spend our professional lives building up a small fortune of coin in the form of publications and citations, and it’s painful to see that devalued, or to think that there’s another sort of scrip in circulation that can buy things that our old-school money cannot.

But let’s forget about careers for a moment and instead talk science.

When it comes to pointing out errors in published work, social media have been necessary. There just has been no reasonable alternative. Yes, it’s sometimes possible to publish peer-reviewed letters in journals criticizing published work, but it can be a huge amount of effort. Journals and authors often apply massive resistance to bury criticisms.

If you are interested in the replication crisis or the practice of science read the whole thing.

via marginalrevolution.com

I read Gelman's post with interest given my social media criticism of Desvousges, Mathews and Train (2015) was happening at the same time. I posted my comment on their paper in three parts last week. The main comment looks at the data and there are two appendices that are replies to their further comment on our 2013 paper. I might have another appendix or three to go. (9/26 update: two more parts are been posted)

The benefits of posting a comment on a blog or elsewhere is that it is immediate and bypasses the where the editor wonders if the problems with the paper rise to the level of publishing the comment (i.e., where the editor must admit that the journal's peer review isn't perfect). A lot of comments don't get written because of the publication lag and the risk of rejection. There are a lot of papers in the literature with small and large problems that were missed by peer review. Blogs and other social media (to a lesser extent twitter) can and should be used to point these problems out. 

Comment on Desvousges, Mathews and Train (2015) continued: cost

Desvousges, Mathews and Train (2015) [DMT] find that their contingent valuation method (CVM) survey does not pass the adding up test. In a previous post (Whitehead, Sept. 20, 2016) I examined the data used by Desvousges, Mathews and Train (2015) and find that "it is ... not clear if [the data] passes the most basic validity test in contingent valuation over 89% of the range of bids."

There are other things wrong with the paper. DMT take the opportunity to make another comment on Haab et al. (2013) in the context of their empirical study. Here is the introduction to their section III titled "potential difficulties in implementing the adding-up test": 

There are several potential difficulties that must be addressed in implementing an adding-up test. Haab et al. (2013) describe these issues and seem to suggest that the potential problems are so great that they outweigh the potential benefits of the test. We believe that these issues need to be considered on a case-by-case basis. In the paragraphs below, we describe these potential difficulties and how they are addressed in our application.

There are four issues: cognitive burden, income effects, provision mechanism and cost. Here is what DMT says about cost:

The adding-up test is usually more expensive to apply than a scope test because it requires at least one more subsample. Fielding the survey is only one element of the overall cost of a project, and so a study with, for example, three subsamples is not 50% more expensive than a study with two subsamples. In our application, the cost of fielding one additional subsample increased the overall cost by less than 5%. ...

A focus on the percentage increase in the cost of the study obscures the magnitude of the additional cost of the study. The total cost is the sum of fixed costs and variable costs. A capital intensive project will make variable costs a small percentage. Variable costs on a CVM study include mostly labor and survey costs. Large labor costs will make the survey costs a small percentage. Any increase in the survey costs will be small when expressed as a percentage. 

An inexpensive online panel (i.e., not GfK Knowledge Panel) like that used by DMT will cost about $5 per completed response (I've purchased samples anywhere from $3-$8 per complete). An additional sample the size of the average of DMT's versions one, three and four will cost about $1000 (where each is about n = 200). This is not a lot of money for a survey. But the money cost of an additional adding up treatment could be high, especially if the surveys are fielded on a high quality survey sample as in Chapman et al. (2009). An additional sample of n = 200 that cost $50 per unit is $10,000 (and n=200 is likely too small).

These are accounting costs. The true costs are the opportunity costs. Suppose you have a fixed survey budget and choose to have an additional subsample to conduct an adding up test. If your survey budget allows for n = 1000 the split-sample external scope test has n = 500 in the base and scope treatments (surveys 1 and 2). An additional subsample reduces the subsample sizes to n = 333 (surveys 1, 2 and 3) and reduces the power of the statistical tests. DMT (2015) fielded three additional samples with n = 293, 164, 175. The latter two samples are of questionable validity (i.e., demand doesn't slope down over 89% of the price range) so low statistical power could be a problem. In this study, the opportunity cost of the additional treatments is additional sample size in the other treatments. 

There is another opportunity cost with an adding up subsample. The cost is the value of the other statistical tests that could be conducted with the additional sample instead of an adding up test. In Whitehead (2016) I argue that it is more important to identify another point on the total benefit curve (i.e., conduct another scope test beyond the typical base and scope treatments) to identify the curvature of the total benefit curve. This is mostly true in the context of benefit-cost analysis where maximizing net benefits of a policy is important. Knowledge of the shape of the total benefit curve can get policy makers a better handle on the optimal amount of pollution or other quantity.

However, this all changes in the context of natural resource damage assessment. If you are working for a plaintiff (e.g., the State of Alaska) the goal of the study is to demonstrate validity of the method and estimate defensible damages [1]. Pursuing this goal is relatively expensive due to the probability-based surveys that must be employed. When you are working for the defendent (e.g., Exxon) the goal is to demonstrate that a method is not valid and estimate damages that are lower than the plaintiff's damages. Pursuing this goal is relatively inexpensive when telephone, mall-intercept and non-probability online survey modes used and small samples of data are collected. These samples are of lower quality than probability based samples and will tend to yield lower quality results [2].

Finally, the last sentence of DMT's cost paragraph is misleading:

... Given that the adding-up test potentially addresses the expert panel’s concern about adequate response while the scope test does not, and that the burden of meeting the panel’s concern “must rest” with the researcher, the extra cost seems justified, at least in some studies.

The NOAA panel was more concerned about the magnitude of the differences in willingness to pay across scope treatments, not the adding up test that was developed by researchers for the defendent in the Exxon Valdez oil spill. Scope elasticity is a more useful approach to assessing plausibility, which was the intent of the panel, not adequacy (see Whitehead 2016). So, this justification for the extra cost of the adding up test is an assertion developed by researchers searching for a "critical test" to discredit the CVM. 

In my opinion, the net benefits of conducting the adding test are low relative to all of the other useful things that can be done to improve the CVM with the additional money. Number one on that list is an additional scope treatment to establish the curvature of the total benefit curve. 

That said, I don't want to discourage researchers who are curious about the adding up test. I just don't think its conduct should be required like price and quantity tests (i.e., bid curve and scope) have become for the CVM. 

Note:

[1] Tim and I worked for the State of Florida in the BP/Deepwater Horizon case (Larkin 2016). We made a number of decisions focused on developing a conservative willingness to pay estimate. 

[2] A non-probability sample can serve many useful research purposes. Inexpensive non-probability samples are useful for exploratory research when budgets are limited. However, researchers should be cautious. Negative or non-results may be more likely with non-representative samples populated by low-paid survey subjects.  

References

Desvousges, William, Kristy Mathews, and Kenneth Train. “An Adding Up Test on Contingent Valuations of River and Lake Quality.” Land Economics 91(2015): 556-571. http://le.uwpress.org/content/91/3/556.refs

Kennedy, Courtney, Andrew Mercer, Scott Keeter, Nick Hatley, Kyley McGeeney, and Alejandra Gimenez, Evaluating Online Nonprobability Surveys, Pew Research Center, May 2, 2016. http://www.pewresearch.org/2016/05/02/evaluating-online-nonprobability-surveys/

Larkin, Sherry, "The Deepwater Horizon Oil Spill," AERE Newsletter 36(1): 24-28, May 2016. http://www.aere.org/newsletters/

Whitehead, John C. "Plausible responsiveness to scope in contingent valuation." Ecological Economics 128 (2016); 17-22. http://www.sciencedirect.com/science/article/pii/S0921800916302890

Whitehead, John C., "A comment on '“An Adding Up Test on Contingent Valuations of River and Lake Quality,'” The Environmental Economics Blog, September 20, 2016. http://www.env-econ.net/2016/09/a-comment-on-an-adding-up-test-on-contingent-valuations-of-river-and-lake-quality.html

Yeager, David S., Jon A. Krosnick, LinChiat Chang, Harold S. Javitz, Matthew S. Levendusky, Alberto Simpser, and Rui Wang. "Comparing the accuracy of RDD telephone surveys and internet surveys conducted with probability and non-probability samples." Public Opinion Quarterly (2011). http://poq.oxfordjournals.org/content/early/2011/10/05/poq.nfr020.short

 

Comment on Desvousges, Mathews and Train (2015) continued: cognitive burden

Desvousges, Mathews and Train (2015) [DMT] find that their contingent valuation method (CVM) survey does not pass the adding up test. In a previous post (Whitehead, Sept. 20, 2016) I examined the data used by Desvousges, Mathews and Train (2015) and find that "it is ... not clear if [the data] passes the most basic validity test in contingent valuation over 89% of the range of bids."

There are other things wrong with the paper. DMT take the opportunity to make another comment on Haab et al. (2013) in the context of their empirical study. Here is the introduction to their section III titled "potential difficulties in implementing the adding-up test": 

There are several potential difficulties that must be addressed in implementing an adding-up test. Haab et al. (2013) describe these issues and seem to suggest that the potential problems are so great that they outweigh the potential benefits of the test. We believe that these issues need to be considered on a case-by-case basis. In the paragraphs below, we describe these potential difficulties and how they are addressed in our application.

There are four issues: cognitive burden, income effects, provision mechanism and cost. Here is what DMT says about cognitive burden:

The test requires that one part of the package of benefits be valued by respondents who are told that they already received another part. In many situations, this type of conditioning can be difficult for respondents to understand. In our application, we have been able to avoid this potential difficulty. One of the reasons we chose the Chapman et al. study is that its design is amenable to descriptions of incremental parts. As discussed below, the surveys for the incremental parts are the same from the respondents’ perspective as the survey for the whole. No additional cognitive burden is imposed. In the original study for the base program (the whole), the years in which recovery will occur with and without the proposed intervention were stated to respondents. We simply changed these stated years for each of the incremental parts. In fact, this change in stated years was used in the original study for differentiating its scope and base versions, which gave us the idea that other increments could be defined similarly. In other applications, describing increments might be more difficult. But it can be useful to identify studies, like Chapman et al.’s, in which the increments can be described without undue additional burden, and to apply adding-up tests in these applications.

I requested the surveys used by DMT so that I could examine them for face validity but only received an explanation that they were simple modifications of the Chapman et al. survey. I don't doubt that the descriptions of the good to be valued introduce no additional cognitive burden as stated in the paragraph above. The problem, in my opinion, is describing the counterfactual situation that one of the incremental parts has already been paid for by the respondent and and provided to the respondent. This description is necessary to account for income and substitution (or complementary, since there are more than 2 goods in the survey respondent's utility function) effects. For n goods, the adding up test requires n + 1 scenarios [1]:

1. Elicit the willingness to pay for good A
2. Elicit the willingness to pay for good B [after describing that good A has been provided at a cost of $X to the respondent]
3. Elicit the willingness to pay for goods A and B

The adding up test is that WTP(1) + WTP(2) = WTP(3). The bracketed part of the second scenario is what introduces the additional cognitive burden. It is a counterfactual that exacerbates the difficulties of CVM (hypothetical bias, etc). A counterfactual situation increases the mental effort (i.e., cognitive burden) that can't be ignored even with the confident assertion that: "No additional cognitive burden is imposed." It is not clear that DMT actually tried to describe the counterfactual in part 2 since they rely on a statistical simulation to determine if income effects matter. So, it might be true that no additional cognitive burden is imposed in their survey. But, in that case DMT (2015) does not conduct an adding up test and there is no reason to think that WTP(1) + WTP(2) = WTP(3). 

If I were given plenty of money to try to get the CVM to pass this test I would do it iteratively. First, I'd conduct two versions of a survey and elicit WTP for A and B to see just what those are without the counterfactual [a second version of this initial survey would elicit WTP for goods A and B and I'd conduct a scope test to determine the plausibility of the WTP difference (Whitehead 2016)].

In a second round of surveys I'd establish the budget constraint (not income) that respondents have available to spend on things like A and B and then in separate subsamples:

1. Elicit the willingness to pay for good A (and see if the WTP is temporally reliable)
2. Elicit the willingness to pay for good B [after describing that good A has been provided at a cost of $X to the respondent, where $X was determined from the initial survey and the respondent's budget for things like A and B is $X lower than they thought]
3. Elicit the willingness to pay for goods A and B

That might work, i.e., the CVM might pass the adding up test, but something similar has already failed in laboratory experiments (Bateman et al. 1997).

Note:

[1] Desvousges, Mathews and Train's (2012) interpretation of Chapman et al. (2009) as an adding up test is, therefore, wrong (Whitehead 2016). 

References

Bateman, Ian, Alistair Munro, Bruce Rhodes, Chris Starmer, and Robert Sugden. "Does part–whole bias exist? An experimental investigation." The Economic Journal 107, no. 441 (1997): 322-332.

Chapman, David, Richard Bishop, Michael Hanemann, Barbara Kanninen, Jon Krosnick, Edward Morey and Roger Tourangeau. 2009. Natural Resource Damages Associated with Aesthetic and Ecosystem Injuries to Oklahoma’s Illinois River System and Tenkiller Lake.

Desvousges, William, Kristy Mathews, and Kenneth Train. "Adequate responsiveness to scope in contingent valuation." Ecological Economics 84 (2012): 121-128. http://www.sciencedirect.com/science/article/pii/S0921800912003813

Desvousges, William, Kristy Mathews, and Kenneth Train. “An Adding Up Test on Contingent Valuations of River and Lake Quality.” Land Economics 91(2015): 556-571. http://le.uwpress.org/content/91/3/556.refs

Whitehead, John C. "Plausible responsiveness to scope in contingent valuation." Ecological Economics 128 (2016); 17-22. http://www.sciencedirect.com/science/article/pii/S0921800916302890

Whitehead, John C., "A comment on '“An Adding Up Test on Contingent Valuations of River and Lake Quality,'” The Environmental Economics Blog, September 20, 2016. http://www.env-econ.net/2016/09/a-comment-on-an-adding-up-test-on-contingent-valuations-of-river-and-lake-quality.html

A Comment on “An Adding Up Test on Contingent Valuations of River and Lake Quality”

John C. Whitehead
Department of Economics
Appalachian State University
Boone, North Carolina

September 20, 2016

Abstract. Desvousges, Mathews and Train (2015) find that their CVM survey does not pass the adding up test. Visual inspection suggests little difference in the pattern of data across subsamples and that the data suffers from non-monotonicity. Probit models estimating the effect of the bid on the yes responses with the lowest bid removed finds little evidence that the data passes the most basic validity test over 89% of the range of bids. The study may suffer from small samples, inexpensive online panels and poor survey design.

Key Words: Contingent Valuation, Adding up test, Dichotomous Choice Data, Non-monotonicity

JEL: Q51

Note: The author thanks Bill Desvousges for providing the data.

Introduction

Desvousges, Mathews and Train (2012) critique Chapman et al. (2009) and argue that contingent valuation method (CVM) studies must pass the “adding up test” to demonstrate adequate responsiveness to scope [see also Whitehead (2016), Chapman et al. (2016) and Desvousges, Mathews and Train (2016)]. Desvousges, Mathews and Train (DMT, 2015) field the Chapman et al. (2009) survey with new sample data and additional scenarios. They find that their CVM survey does not pass the adding up test.

Data

The DMT data for the five samples is presented in Table 1 and displayed in Figure 1. DMT argue that willingness to pay for the whole should be equal to willingness to pay for the sum of four parts (first, second, third and fourth). Visual inspection suggests that there is little difference in the pattern of data across subsamples except for the second sample which lies below each of the other bid curves at every bid except $125. Dichotomous choice contingent valuation surveys present respondents with a bid (i.e., cost) and ask them if they would be willing to pay the bid. As the bid increases the probability that respondents will agree to pay the bid tends to fall (Dickinson and Whitehead 2015). Visual inspection suggests that the DMT data suffers from non-monotonicity (i.e., the percentage does not always decrease as the bid increases).

Most of the curvature in the data appears to be as the bid rises from $10 to $45. The difference in the percentage of yes responses (D = %yes[$10] - %yes[$45]) is 5, 16, 21, 37 and 29 for the whole, first, second, third and fourth samples with an average of 22. The average difference for the other bid gradients are -4 (as the bid increases from $45 to $80), 5 ($80 to $125), 11 ($125 to $205) and 2 ($205 to$450). This last small difference illustrates the fat tails problem found by Parsons and Myers (2016).

Results

Probit models estimating the effect of the bid on the yes responses with the $10 bid removed are in Table 2. Only two of the five coefficients (B) on the bid variable are statistically significant at the p=.10 level. [the corrigendum is here: http://www.env-econ.net/2016/10/a-comment-on-an-adding-up-test-on-contingent-valuations-of-river-and-lake-quality-correction.html]

Conclusions

The DMT data does not pass the adding up test. It is also not clear if it passes the most basic validity test in contingent valuation over 89% of the range of bids. This conclusion is similar to DMT’s Table 3 and accompanying discussion (i.e., why did I feel the need to conduct this analysis? IDK!). DMT suggest that there is something wrong with the CVM. It may also be the case that there is something wrong with the DMT study.

DMT employ small sample sizes and data from a relatively inexpensive online panel. Also, DMT use the Chapman et al. (2009) survey for the whole and second versions of the study. These are two scenarios that perform relatively well statistically -- the whole and second scenarios pass the scope test. For the first, third and fourth scenarios DMT "modified its instruments as little as possible to represent these situations." Two of the three scenarios constructed by DMT perform poorly on the bid test. The one scenario that passes has a 100% larger sample size. It is difficult to know what is in these survey scenarios as they have not been shared as readily as the data.  

Critiquing the CVM because it does not pass the adding up test when the bid curves are not altogether downward sloping is similar to criticizing a basketball player who can’t make a layup only when they fail to hit a three pointer. The player should really be encouraged to work on their layups.

Appendix

Comment on Desvousges, Mathews and Train (2015) continued: cognitive burden (Sept 21, 2016)

Comment on Desvousges, Mathews and Train (2015) continued: cost (Sept 22, 2016)

Comment on Desvousges, Mathews and Train (2015) continued: theory (Sept 24, 2016)

Comment on Desvousges, Mathews and Train (2015) continued: WTP Estimates (Sept 26, 2016)

 

Figure 1. Dichotomous Choice Bid Curves with DMT Data Exhibiting Non-Monotonicity

References

Chapman, David, Richard Bishop, Michael Hanemann, Barbara Kanninen, Jon Krosnick, Edward Morey and Roger Tourangeau. 2009. Natural Resource Damages Associated with Aesthetic and Ecosystem Injuries to Oklahoma’s Illinois River System and Tenkiller Lake.

Chapman, David J., Richard C. Bishop, W. Michael Hanemann, Barbara J. Kanninen, Jon A. Krosnick, Edward R. Morey, and Roger Tourangeau. "On the adequacy of scope test results: Comments on Desvousges, Mathews, and Train." Ecological Economics 130 (2016): 356-360. http://www.sciencedirect.com/science/article/pii/S0921800916306139

Desvousges, William, Kristy Mathews, and Kenneth Train. “An Adding Up Test on Contingent Valuations of River and Lake Quality.” Land Economics 91(2015): 556-571. http://le.uwpress.org/content/91/3/556.refs

Desvousges, William, Kristy Mathews, and Kenneth Train. “Reply to ‘On the adequacy of scope test results: Comments on Desvousges, Mathews, and Train’,” Ecological Economics 130 (2016): 361–362. http://www.sciencedirect.com/science/article/pii/S0921800916306139

Dickinson, David L., and John C. Whitehead. "Dubious and Dubiouser: Contingent Valuation and the Time of Day." Economic Inquiry 53, no. 2 (2015): 1396-1400. http://onlinelibrary.wiley.com/doi/10.1111/ecin.12161/full

Parsons, George R., and Kelley Myers. "Fat tails and truncated bids in contingent valuation: An application to an endangered shorebird species." Ecological Economics 129 (2016): 210-219. http://www.sciencedirect.com/science/article/pii/S0921800915301567

Whitehead, John C. "Plausible responsiveness to scope in contingent valuation." Ecological Economics 128 (2016a); 17-22. http://www.sciencedirect.com/science/article/pii/S0921800916302890

"Sample Cover Letter for Journal Manuscript Resubmissions"

Academia Obscura:

Dear Sir, Madame, or Other:

Enclosed is our latest version of Ms # 85-02-22-RRRRR, that is, the re-re-re-revised revision of our paper. Choke on it. We have again rewritten the entire manuscript from start to finish. We even changed the goddamn running head! Hopefully we have suffered enough by now to satisfy even you and your bloodthirsty reviewers.

I shall skip the usual point-by-point description of every single change we made in response to the critiques. After all, it is fairly clear that your reviewers are less interested in details of scientific procedure than in working out their personality problems and sexual frustrations by seeking some kind of demented glee in the sadistic and arbitrary exercise of tyrannical power over helpless authors like ourselves who happen to fall into their clutches. We do understand that, in view of the misanthropic psychopaths you have on your editorial board, you need to keep sending them papers, for if they weren’t reviewing manuscripts they’d probably be out mugging old ladies or clubbing baby seals to death. Still, from this batch of reviewers, C was clearly the most hostile, and we request that you not ask him or her to review this revision. Indeed, we have mailed letter bombs to four or five people we suspected of being reviewer C, so if you send the manuscript back to them the review process could be unduly delayed.

Some of the reviewers’ comments we couldn’t do anything about. For example, if (as review C suggested) several of my recent ancestors were indeed drawn from other species, it is too late to change that. Other suggestions were implemented, however, and the paper has improved and benefited. Thus, you suggested that we shorten the manuscript by 5 pages, and we were able to accomplish this very effectively by altering the margins and printing the paper in a different font with a smaller typeface. We agree with you that the paper is much better this way.

One perplexing problem was dealing with suggestions #13-28 by Reviewer B. As you may recall (that is, if you even bother reading the reviews before doing your decision letter), that reviewer listed 16 works that he/she felt we should cite in this paper. These were on a variety of different topics, none of which had any relevance to our work that we could see. Indeed, one was an essay on the Spanish-American War from a high school literary magazine. The only common thread was that all 16 were by the same author, presumably someone whom Reviewer B greatly admires and feels should be more widely cited. To handle this, we have modified the Introduction and added, after the review of relevant literature, a subsection entitled “Review of Irrelevant Literature” that discusses these articles and also duly addresses some of the more asinine suggestions in the other reviews.

We hope that you will be pleased with this revision and will finally recognize how urgently deserving of publication this work is. If not, then you are an unscrupulous, depraved monster with no shred of human decency. You ought to be in a cage. May whatever heritage you come from be the butt of the next round of ethnic jokes. If you do accept it, however, we wish to thank you for your patience and wisdom throughout this process and to express our appreciation of your scholarly insights. To repay you, we would be happy to review some manuscripts for you; please send us the next manuscript that any of these reviewers submits to your journal.

Assuming you accept this paper, we would also like to add a footnote acknowledging your help with this manuscript and to point out that we liked the paper much better the way we originally wrote it but you held the editorial shotgun to our heads and forced us to chop, reshuffle, restate, hedge, expand, shorten, and in general convert a meaty paper into stir-fried vegetables. We couldn’t, or wouldn’t, have done it without your input.

Sincerely,

via www.academiaobscura.com

One of these days, not too far away, I'm going to write something similar.

How to make a gas shortage worse ... impose a price ceiling

The weird center alignment is from the source:

Governor Pat McCrory today activated North Carolina’s State Emergency Response Team to coordinate with counties regarding fuel needs as Colonial Pipeline officials continue working to fix a damaged pipeline that supplies much of the east coast with petroleum products.

“I continue to warn motorists to be on the lookout for price gouging,” said Governor McCrory. “We are taking steps to protect consumers and ensure that fuel is continuing to flow into the state. To help ensure adequate fuel supplies, I have instructed state agencies to consider options to limit fuel use, including curtailing non-essential travel for state employees.”

via wataugaonline.com

The political definition of price gouging tends to be price rising. If the government doesn't allow prices to rise with a shortage then the shortage persists. Consumers may even make it worse by increasing demand and hoarding in case they need the product later when it is not available. 

There have been over 600 complaints:

NC Attorney General spokeswoman Noelle Talley says investigators are checking reports of gas being sold at $5.89 a gallon and another offered at more than $4 a gallon.

Talley says a station north of Winston-Salem advertised a price of $9.99 a gallon, but that was after it had run out of gas.

A CBS North Carolina viewer reported that a Durham gas station received a delivery of gas and that prices at the station immediately jumped from $2.19 a gallon to $2.79 per gallon late Monday afternoon.

The NC AG should leave that $2.79 complaint alone. 

The Wealth of Nations and the Price of Baseball Tickets

I was cleaning off some bookshelves this afternoon and I came across a copy of The Wealth of Nations that I borrowed from a local library my senior year as an undergraduate (and never returned, but that's not part of the story)--in 1991.  Sticking out of the book was a ticket to an Orioles/A's major league game in Baltimore at old Memorial Stadium (ticket is pictured below):

I know it's difficult to read, but the price of an upper reserve ticket in 1991 was $3.75.  That's $6.63 in today's dollars.

An upper reserve ticket to tonight's Orioles/Red Sox game at Camden Yards would run you between $15 and $30.