Consequentiality and the Willingness-To-Pay for Renewables: Evidence from Germany
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Date
2017
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Abstract
Based on hypothetical responses originating from a large-scale survey among
about 7,000 German households, this study investigates the discrepancy in willingness-to-
pay (WTP) estimates for green electricity across discrete-choice and open-ended valuation
formats, thereby accounting for perceived consequentiality: respondents selfselect
into two groups distinguished by their belief in the consequentiality of their
answers for policy making. Recognizing that consequentiality status and WTP might
be jointly influenced by unobservable factors, we employ a switching regression model
that accounts for the potential endogeneity of respondents’ belief in consequences and,
hence, biases from sample selectivity. Contrasting with the received literature, we find
WTP bids that tend to be higher among those respondents who obtained questions
in the open-ended format, rather than single binary choice questions. This difference
shrinks, however, when focusing on individuals who perceive the survey as politically
consequential.
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Keywords
elicitation format, contingent valuation