Testing for Consistency in Tourists' Willingness to Pay for New Nature Reserves in the Gulf of Morbihan (France)

In this paper, we develop an empirical test of consistency in contingent willingness to pay (WTP) responses, which is based on the following a priori expectation. In economics, when an individual considers paying for public goods, his decision to pay, and his WTP are based on utility-maximising behaviour. Accordingly, supposing other factors are identical, if individual A expresses greater interest in paying for public goods in general than individual B, that is because A receives more benefits from the use and/or the non-use of these goods than B. Continuing with this logic, if both individuals are asked about their WTP for a precise public good, A should logically be more likely to pay and should be willing to pay more than B. Thus, the test consists in measuring the degree to which people are likely to give money for public goods in general, and including it as a covariate in WTP models for the specific public good. If this covariate is significantly positive, then WTP responses are considered consistent. If this is not the case, then future research might focus on motives behind inconsistent WTP responses. To assess the robustness of the test, we consider 3 situations 1) the covariate is exogenous 2) it is endogenous and uncorrelated with the choice to pay or not for the specific good 3) it is endogenous and correlated with this choice. Using a contingent valuation study estimating tourists’ willingness to pay for future nature reserves in the Gulf of Morbihan, we find that WTP responses are consistent in all situations considered.

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Conference Paper/ Presentation
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JEL Codes:
C24; D12; Q26

 Record created 2017-04-01, last modified 2017-08-26

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