Stated Preference

1
Stated Preference
2
Stated

• Means you ask somebody about something rather
  than watch them do something.
• You can lie.

3
Passive use

• I love wolves existence but I dont do anything
  at all with them
• I dont contribute to wolf organizations
• I dont go to Yellowstone to see them
• I just love them while sitting alone in my
  armchair
• Travel cost gives a value for me of zero for
  wolves.

4
So Ask

• First tell respondent about wolves and their role
  in ecosystem.
• Show them pictures of wolves, yellowstone, and
  excess herbivory
• Describe a specific project
• Allow them to run free in Yellowstone
• Need money to pay for dead sheep

5
Money

• Now talk to them about money and how it could be
  used for other projects.

6
The Question

• Open ended
• How much would you be willing to pay to make
  yellowstone a wolf haven?
• Referendum
• Would vote for a surcharge on your income tax of
  X to support the wolf indemnification program so
  that yellowstone can be a wolf haven?
• Choose x to be different numbers for different
  people to trace a demand curve.

7
Lies

• You want more wolves in Yellowstone and are truly
  willing to pay 50.
• You know that the WTP measure computed from the
  survey will determine the number of wolves.
• What number do you give as an answer to how much
  will you pay?
• Do you say yes to the referendum at 60?

8
Utility and Environment

• U aE bI
• E of wolves
• I Income
• Two cases, with and without improvement
• U1 aE1 b I
• U2 aE2 b (I-P)
• P is payment

9
Pick the best

• Says yes to referendum if
• U2 U1
• a(E2-E1) bP 0
• If people are a little different
• ei is the little bit of difference in wolf
  liking
• U2 aE2 b(I-P) ei
• U2 U1 means
• a(E2-E1) bP ei 0

10
Who says yes

• a(E2-E1) bP ei 0
• All those who have es
• ei a (E2 E1) bP
• So for each P we will have some fraction that
  says Yes and some that says NO.
• We choose a and b to make the predicted fractions
  as close as possible to the actual fractions.

11
WTP