INFORMING CONTINGENT VALUATION METHODS WITH INTERNET SURVEYS

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INFORMING CONTINGENT VALUATION METHODS WITH
INTERNET SURVEYS

• Robert P. Berrens, Alok K. Bohara, Carol Silva,
  Hank Jenkins-Smith, Dave Weimer
• Project funded by the Decision, Risk and
  Management Science Program, National Science
  Foundation http//www.nsf.gov/cgi-bin/showaward?a
  ward9818108

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OVERVIEW

• Contingent valuation surveys and passive use
  benefits
• Decreasing viability of telephone surveys?
• Increasing viability of Internet surveys?
• Study design telephone and Internet splits
• Mental accounts (telephone and Internet)
• Enhanced information (Internet)
• Modified Kyoto Protocol (Internet)
• Preliminary Findings

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GENERAL QUESTIONS

• Technological question
• Can the Internet be used as an alternative to
  the telephone for administering contingent
  valuation (CV) surveys?
• If yes, then dramatic revolution!
• If no, then how far off?

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GENERAL QUESTIONS, Continued

• Methodological questions Whether or not the
  Internet is a survey replacement technology for
  the telephone, can the Internet be used as a
  low-cost tool for investigating methodological
  issues about CV?
• Role of greatly increased availability of
  information
• Role of mental account questions

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GENERAL QUESTIONS, Continued

• Substantive questions
• What is the willingness of the U.S. population to
  pay for ratification of the Kyoto Protocol?
• Would willingness to pay be substantially higher
  if developing countries had emission limits?

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CONTINGENT VALUATION IS HERE TO STAY

• Desire to include passive-use benefits in
  cost-benefit analysis
• Direct correspondence to option price as benefit
  measure
• "Structured conversation" when no "behavioral
  traces"
• State of Ohio v. Department of Interior (1989)
• Passive-use values valid in CERCLA damage
  assessment
• Oil Pollution Act of 1990
• Increased use of CV in natural resource damage
  litigation

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GROWING LEGITIMACY

• NOAA Panel (Arrow et al., 1993)
• Qualified endorsement by blue ribbon panel
• Academic mainstream (environmental economists)
• Since January 1990 the Journal of Environmental
  Economics and Management and Land Economics have
  published 65 articles reporting on CV surveys
  (mean sample size is 730)

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CV METHODOLOGICAL ISSUES

• Elicitation method
• Dichotomous choice/policy referendum format
  preferred
• Bishop and Heberlein (1979)
• NOAA Panel recommends
• Incentive compatibility (Carson, Groves, Machina,
  1999)
• Consequential questions potential effect,
  matters
• Public good with coercive payments most likely
  incentive compatible
• Payment vehicle
• Non-commitment bias reminder needed
• "Top down disaggregation method" or mental
  accounts

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MORE ISSUES

• Description of good
• "Hypotheticality problems"
• Meaning and context must be understood
• Decision making
• Embedding effects responses not always scale
  dependent
• "Warm glow broad moral attitudes rather than
  valuation
• Willingness-to-pay versus willingness-to-accept

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DECREASING VIABILITY OF TELEPHONE SURVEYS?

• Random digit dialing as "probability sample" of
  households
• Decreasing response rates, or increasing cost per
  response
• Hectic pace of life
• Increased telemarketing, sometimes in guise of
  survey
• Skepticism related to perceived biases
• Increasing complexity of telephone system
• More lines per household
• Lines dedicated to facsimile machines and
  computers
• More cellular telephones (86 million subscribers
  in 1999)
• More answering machines more call screening
• Breakdown of geographic area codes
• More non-working numbers (Probability of reaching
  working number fell from 21 in 1988 to 13 in
  1998)

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INCREASING VIABILITY OF INTERNET SURVEYS?
Spaming prohibitions prevent any analog to RDD,
but ...

• Creation of proprietary panels of cooperative
  respondents (non-systematic recruitment)
• Harris Interactive panel of U.S. adults
• 4.4 million in January 2000
• 4.8 million in August 2000
• Over 6 million now, and growing
• Creation of proprietary panels of cooperative
  respondents (random recruitment)
• Knowledge Networks panel of U.S. households
• Approximately 100,000 households, growing to
  250,000
• Provides fee equipment and Internet service
  weekly surveys

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INTERNET PENETRATION

• Fraction of U.S. households with Internet access
  is approaching 50
• Women and men now use at same rate
• Women 17 in 1997 49 in 2000
• Ethnic minorities converging
• African-American 33 Asian-American 69
• Hispanic-Americans 47 Caucasian-Americans 43
• Age profile converging rapidly, but those over 55
  still underrepresented
• Income converging, but
• Under 20K, 6 of Internet users, 19 of
  population
• Over 150K, 8 of Internet users, 4 of population

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POTENTIAL ADVANTAGES OF INTERNET SURVEYS

• Lower cost per respondent
• Our telephone survey about 50K for 1,700
  respondents
• Our Internet survey about 40K for 13,000
  respondents
• Lower cost makes larger sample sizes feasible
• Within-versus across-study methodological
  comparisons
• Greater sub-sample opportunities
• Eliminates interviewer bias
• Identification of rare respondents (medical
  research)
• Speed (likely application in polling Harris did
  well in 2000 election forecasts)
• Opportunity to provide more and different
  information than possible in telephone surveys

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INTERNET SKEPTICS

• "... The panel used as a frame to sample
  respondents is not a probability sample of
  internet users. Even if it were, internet users
  are not like non-internet users. For instance,
  they are better educated, more affluent, and more
  male. The important characteristics for weighting
  have not yet been identified. Generalizations
  from a census of the growing millions in the
  panel do not even represent internet users. The
  whole panel represents nothing but itself ... I
  can see no valid survey purpose to the current
  internet enterprise. All that will happen will be
  the accumulation of thousands upon thousands of
  interviews of dubious merit that will mislead the
  public and destroy whatever credibility surveys
  and polls now have. A growing number of survey
  researchers are unfortunately being led to the
  rocks like Ulysses sailors following the Siren
  call of cheap, but worthless, data." (pp 25-26)
• Warren J. Mitofsky, "Pollsters.com," Public
  Perspectives, June/July 1999, 24-26.

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DOES WEIGHTING OFFER HOPE?

• Exxon Valdez CV (Carson et al., 1993)
• Gold-plated, "litigation quality" survey
• Relatively large sample 1,043
• Cost approximately 3 million
• Estimated damage from Exxon Valdez spill 2.128
  billion
• "Replication" (Harrison and Lesley, 1996)
• Convenience sample
• North and South Carolina Students
• Modest sample size 449
• Simplified questionnaire format
• Cost approximately 2,500 plus some beers
• Estimated 4.044 billion in damages with raw
  sample data
• Estimated 2.807 billion in damages with
  demographic weighting that applies population
  means to coefficients estimated in
  willingness-to-pay function

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OUR STUDY

• Telephone survey
• Institute for Public Policy, University of New
  Mexico, January 2000 1,699 completed surveys
• Internet survey (planned)
• Harris Interactive, Rochester, January 2000
  13,034 completed surveys
• Internet survey (subsequent)
• Harris Interactive, August 2000 11,160 completed
  surveys
• Knowledge Networks, Stanford, November 2000
  1,500 expected
• To take survey
• http//www.unm.edu/instpp/gcc/

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EXPERIMENTAL DESIGN
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SURVEY OVERVIEW

• Demographics (education and sex)
• Environmental attitudes
• Global climate change knowledge
• Split 1
• Basic reminder/Mental accounts
• Split 2 (Internet only)
• Basic information/Enhanced information
• Kyoto Protocol background
• Split 3 (Internet only)
• Basic Kyoto referendum/Modified Kyoto
  referendum
• Attitudes toward appropriateness of
  willingness-to-pay
• Perceived efficacy of Kyoto Protocol
• Balance and usefulness of enhanced information
  (as relevant)
• Presidential candidate questions
• Respondent demographics, politics, and computer
  use

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BASIC KYOTO PROTOCOL QUESTION

• Seven preparatory questions to describe Protocol,
  then
• The US Senate has not yet voted on whether to
  ratify the Kyoto Protocol. If the US does not
  ratify the treaty, it is very unlikely that the
  Protocol can be successfully implemented.
• Suppose that a national vote or referendum were
  held today in which US residents could vote to
  advise their Senators whether to support or
  oppose ratifying the Kyoto Protocol. If US
  compliance with the treaty would cost your
  household X dollars per year in increased energy
  and gasoline prices, would you vote for or
  against having your Senators support ratification
  of the Kyoto Protocol? Keep in mind that the X
  dollars spent on increased energy and gasoline
  prices could not be spent on other things, such
  as other household expenses, charities,
  groceries, or car payments.
• X is randomly chosen from 6 12 25 75 150 225
  300 500 700 900
• (1200 and 1800 added after telephone pretest)

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MODIFIED KYOTO PROTOCOL QUESTION

• (Same lead-up questions)
• The US Senate has not yet voted on whether to
  ratify the Kyoto Protocol. If the US does not
  ratify the treaty, it is very unlikely that the
  Protocol can be successfully implemented.
• An alternative to the Kyoto Protocol, which we
  will refer to as the Modified Kyoto Protocol,
  would make only one change in the agreement It
  would require that developing countries, such as
  China, India, Mexico, Brazil, and Argentina,
  promise to restrict their future production of
  greenhouse gases to no more than 5 percent above
  current levels.

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MENTAL ACCOUNTS TREATMENT

• Standard reminder as part of willingness-to-pay
  question
• Mental accounts approach
• Questions to encourage budget consideration
• Ask prior to valuation question
• May be useful in estimating willingness-to-pay
  models

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MENTAL ACCOUNTS QUESTIONS

• First level compartment
• Now think about your average monthly income and
  expenses.
• After you have paid all the necessary bills for
  such things as housing, transportation,
  groceries, insurance, debt, and taxes, what
  percent of your income is left over for optional
  uses on things like recreation, savings, and
  giving for charity and other causes?
• Second level compartment
• Now think about the portion of your total income
  available for optional uses. On average, what
  percent of that amount do you use for
  contributions to environmental causes, such as
  donations for specific programs or contributions
  and memberships to environmental advocacy groups?
  
• Note Please remember that we are not asking for
  money for anything, and that your answers will be
  kept completely confidential.

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ENCHANCE INFORMATION

• Information menu
• Open through referendum question and follow-ups
• Lists 27 entries
• Each entry contains one page of information
• Follow-up questions
• Visits and time spent
• Perceived usefulness and bias

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INVITATION TO MENU

• Thank you for your answers to the previous
  section. Next we would like your views on a
  particular environmental treaty, the Kyoto
  Protocol. The Kyoto Protocol is concerned with
  addressing the issue of possible human causes of
  global climate change.
• Before proceeding to the questions on the Kyoto
  Protocol, you are invited to explore a brief
  information menu we have made available.
• The items in the information menu are intended to
  provide brief and balanced summaries of research
  and informed opinion about global climate change,
  and the Kyoto Protocol. Because the volume of
  information on these matters is enormous and
  growing rapidly, we sought to make the items in
  the information menu broadly representative and
  readily understood, rather than exhaustive.
• Please feel free to visit as many pages as you
  wish as you proceed through the survey questions.
  

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INFORMATION MENU

• Global Warming Theory
• Basic "Greenhouse" Mechanism
• Greenhouse Gases
• Carbon Dioxide Changes
• Feedback Mechanisms
• Feedbacks Related to Carbon Dioxide and Methane
• Feedbacks Related to Water Vapor, Clouds, and Ice
  Cover
• Feedbacks Related to Ocean Currents
• Aerosol Offsets
• Temperature Predictions under Current Policy
• Evidence of Global Warming
• Ground-Based Measurements
• Atmospheric Measurements

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INFORMATION MENU, Continued

• Consequences of Global Warming
• Sea Level Changes
• Ecological Effects
• Agricultural Effects
• Health Effects
• Weather Extremes
• Alternative Theories and Explanations for
  Apparent Warming
• Solar Cycles
• Measurement Issues
• Modeling Limitations

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INFORMATION MENU, Continued

• Kyoto Protocol on Climate Change
• Background
• Country Commitments
• Flexibility Mechanisms
• Predicted Impacts under Full Implementation
• Ratification Status, Political Views, and Public
  Opinion
• Ratification Status
• Views in Opposition to Ratification of the Kyoto
  Protocol
• Views in Favor of Ratification of the Kyoto
  Protocol
• Selected Reports from Public Opinion Surveys

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Very Preliminary Findings

• Demographics
• Knowledge about effects and causes of global
  climate change
• Relationships across modes
• Use and perception of bias in information

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Demographics
Telephone January 2000 (Semi-Weighted) Internet January 2000 (Weighted) Internet August 2000 (Weighted)
Mean Age (years) 41.8 43.7 44.4
Percent Male 47.1 48.0 48.0
Percent Some College or More 66.2 48.0 49.5
Percent Hispanic 7.5 10.0 10.2
Percent African-American 7.3 12.4 11.5
Mean Annual Household Income () 58,404 45,064 52,189
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Knowledge Telephone Internet 1
Internet 2
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Relationship between Ideology and Belief about
Environmental Threat (0 no real threat 10
brink of collapse)
N23,273 R2.11 Coefficient Standard Error P-Value
Ideology (1 SL 7SC) -.34 .04 .000
Ideology Internet 1 -.15 .06 .015
Ideology Internet 2 -.15 .05 .004
Internet 1 .67 .26 .010
Internet 2 .55 .24 .020
Constant 7.12 .18 .000
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Relationship between Ideology and Belief about
Environmental Threat Controlling with Demographic
Covariates
N19,292 R2.13 Coefficient Standard Error P-Value
Ideology -.33 .05 .000
Ideology Internet 1 -.08 .06 .157
IdeologyInternet 2 -.10 .06 .089
Internet 1 .37 .25 .132
Internet 2 .28 .26 .282
Five Demographic Controls Income (-), Age, Sex (M-), College,African-American ------ ----- -----
Constant 7.70 .24 .000
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Use and Perception of Enhanced Information

• How many pages did you visit?
• Mean 6.3 (Range 0 to 27)
• How much time did you spend?
• Mean 9.1 minutes (12.3 for visitors)
• How useful did you find the information?
• Mean 5.3 (0not at all 10extremely useful)
• How balanced did you find the information?
• Mean 5.3 (0biased against GCC 10 for)
• Tri-modal distribution 54 at 5 10 at 0, 7 at
  10