Accounting for implicit and explicit payment vehicles in a discrete choice experiment

M.A. Talpur; M.J. Koetse; R. Brouwer

doi:10.1080/21606544.2018.1450789

Accounting for implicit and explicit payment vehicles in a discrete choice experiment

M.A. Talpur, M.J. Koetse, R. Brouwer

Environmental Economics

Research output: Contribution to Journal › Article › Academic › peer-review

Abstract

This study estimates the benefits of beach quality improvements, using travel costs as an implicit and entrance fee as an explicit payment vehicle in two otherwise identical labelled discrete choice site selection models. Including entrance fee as an explicit payment vehicle in addition to implicit travel costs is expected to affect beach visitors’ preferences and willingness to pay (WTP) since travel costs only are not expected to measure maximum WTP. Convergent validity of preference parameters and WTP derived from the two identical discrete choice experiments (DCEs) is tested using a split-sample approach and specifying a mixed logit choice model. Both preferences and scale parameters are significantly different between the two samples. As expected, mean WTP values are higher when an explicit entrance fee is included in the DCE. Our results suggest that implicit payment vehicles in choice experiments underestimate welfare changes. Beach visitors’ positive WTP holds promise for the introduction of economic instruments such as entrance fees to support the financial sustainability of improved beach management.

Original language	English
Pages (from-to)	363-385
Number of pages	23
Journal	Journal of Environmental Economics and Policy
Volume	7
Issue number	4
Early online date	20 Mar 2018
DOIs	https://doi.org/10.1080/21606544.2018.1450789
Publication status	Published - 2 Oct 2018

Bibliographical note

Funding Information:
This work was supported by Higher Education Commission (HEC), Islamabad, Pakistan [grant number NO/SU/PLAN/F.SCH/105], [grant number NO/SU/PLAN/F.SCH/232]. We are grateful to the University of Sindh, Jamshoro, and the Higher Education Commission (HEC), Islamabad, Pakistan, for their financial support. The authors are also thankful to Dr. Heman Das Lohano from the Institute of Business Administration (IBA), Karachi, Pakistan for his helpful discussions and comments, especially with regards to the effects coding used in our models. As always, the usual disclaimer applies.

Funding Information:
We are grateful to the University of Sindh, Jamshoro, and the Higher Education Commission (HEC), Islamabad, Pakistan, for their financial support. The authors are also thankful to Dr. Heman Das Lohano from the Institute of Business Administration (IBA), Karachi, Pakistan for his helpful discussions and comments, especially with regards to the effects coding used in our models. As always, the usual disclaimer applies.

Publisher Copyright:
© 2018 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group.

Copyright:
Copyright 2021 Elsevier B.V., All rights reserved.

Keywords

beach site selection choice
Discrete choice experiment
payment vehicle
travel costs
willingness to pay

UN SDGs

This output contributes to the following UN Sustainable Development Goals (SDGs)

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title = "Accounting for implicit and explicit payment vehicles in a discrete choice experiment",

abstract = "This study estimates the benefits of beach quality improvements, using travel costs as an implicit and entrance fee as an explicit payment vehicle in two otherwise identical labelled discrete choice site selection models. Including entrance fee as an explicit payment vehicle in addition to implicit travel costs is expected to affect beach visitors{\textquoteright} preferences and willingness to pay (WTP) since travel costs only are not expected to measure maximum WTP. Convergent validity of preference parameters and WTP derived from the two identical discrete choice experiments (DCEs) is tested using a split-sample approach and specifying a mixed logit choice model. Both preferences and scale parameters are significantly different between the two samples. As expected, mean WTP values are higher when an explicit entrance fee is included in the DCE. Our results suggest that implicit payment vehicles in choice experiments underestimate welfare changes. Beach visitors{\textquoteright} positive WTP holds promise for the introduction of economic instruments such as entrance fees to support the financial sustainability of improved beach management.",

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N2 - This study estimates the benefits of beach quality improvements, using travel costs as an implicit and entrance fee as an explicit payment vehicle in two otherwise identical labelled discrete choice site selection models. Including entrance fee as an explicit payment vehicle in addition to implicit travel costs is expected to affect beach visitors’ preferences and willingness to pay (WTP) since travel costs only are not expected to measure maximum WTP. Convergent validity of preference parameters and WTP derived from the two identical discrete choice experiments (DCEs) is tested using a split-sample approach and specifying a mixed logit choice model. Both preferences and scale parameters are significantly different between the two samples. As expected, mean WTP values are higher when an explicit entrance fee is included in the DCE. Our results suggest that implicit payment vehicles in choice experiments underestimate welfare changes. Beach visitors’ positive WTP holds promise for the introduction of economic instruments such as entrance fees to support the financial sustainability of improved beach management.

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Accounting for implicit and explicit payment vehicles in a discrete choice experiment

Abstract

Bibliographical note

Keywords

UN SDGs

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