Peeling back the onion

Hammitt, James K. and Herrera Araujo, Daniel Andres (2017) Peeling back the onion: Using latent class analysis to uncover heterogeneous responses to stated preference surveys. TSE Working Paper, n. 17-766, Toulouse

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We develop validity tests for application to stated-preference estimates of WTP to reduce mortality risk, i.e., value per statistical life (VSL), and apply these to data obtained by surveying a representative sample of French adults over the internet. These tests (WTP nearly proportional to risk reduction, insensitive to small differences in baseline risk, increasing in income, and consistent with budget constraints) are satisfied by a conventional single-regression analysis of our data. Using latent class analysis (LCA), we identify important differences between respondents in their consistency with the validity tests and control for much of this heterogeneity. Estimates of VSL from the latent class that is consistent with the validity tests are smaller than estimates from the standard analysis. We estimate mean VSL for adults of about 2 million e and for children (based on parents’ WTP) of about 6 million euros.

Item Type: Monograph (Working Paper)
Sub-title: Using latent class analysis to uncover heterogeneous responses to stated preference surveys
Language: English
Date: February 2017
Place of Publication: Toulouse
Uncontrolled Keywords: Value per Statistical Life, Latent Class Analysis, Paradata, Scope sensitivity, Income elasticity, Pesticides, Children
JEL codes: D03 - Behavioral Economics; Underlying Principles
D64 - Altruism
I18 - Government Policy; Regulation; Public Health
Q18 - Agricultural Policy; Food Policy
Q51 - Valuation of Environmental Effects
Divisions: TSE-R (Toulouse)
Institution: Université Toulouse 1 Capitole
Site: UT1
Date Deposited: 23 Feb 2017 16:14
Last Modified: 21 Mar 2018 14:32

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