Testing for the Internal Consistency of Choice Experiments Using Explicit Rankings of Quality Attributes

Abstract

Choice experiments (CEs) are an increasingly important tool in the environmental valuation literature because of their ability to deal with multifaceted environmental issues and their basis in random utility theory. One particularly useful aspect of the CE method is that it allows researchers to estimate marginal rates of substitution between an environmental resource’s various attributes. These marginal rates of substitution provide an implicit ranking of the attributes, which can be compared with other ranking mechanisms. In this paper we describe a method for testing for the internal consistency of choice experiments by comparing the implicit attribute ranking generated by a CE with that generated by an explicit attribute-ranking exercise. The analysis uses data gathered through a unique survey in which respondents completed both a CE exercise and an attribute-ranking exercise indicating their preferences over pollution abatement and water quality improvement strategies for a freshwater lake in north-central Iowa. Comparisons are made on a sample-wide basis as well as an individual basis.Environmental valuation, choice experiments, internal consistency