Willingness to Accept and price variable in relative terms

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Willingness to Accept and price variable in relative terms

Postby Insa » Mon Oct 19, 2020 10:47 pm

Hello,
Some time ago I conducted a Discrete Choice Expermiment among farmers about their willingness to use an emission reduction technology.
At that time, we decided to use a cost share in % as a price variable, as the costs of the examined procedure could not be clearly quantified (hypothetical market).

The attributes in the choice sets are emission reduction in %, cost share in %, reliefs on the German fertilizer ordinance (dummies).

A colleague of mine raised the question of whether the Willingness to Accept can be calculated at all with a price variable in percentage points (cost share offered).I assumed at the time that it was possible, since it only describes the relationship between two marginal effects. Nevertheless, I would like to clarify this and I would be glad if you could help me, since I could not find anything in the literature.
Regards Insa
Insa
 
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Re: Willingness to Accept and price variable in relative ter

Postby Michiel Bliemer » Wed Oct 21, 2020 8:34 am

If you use price in $ (or another currency) as an attribute then you can compute the WTA in terms of the amount of money. If you use a price deviation in percentage then I think you are computinh the WTA in terms of the percentage of cost sharing, so it is not expressed in the amount of money but rather a percentage. If that is what you are looking for, then it is fine. If you need WTA expressed in money, then you probably need to assume a base level in S and convert the percentages into amount of money. But this may only be possible if the respondents were aware of this base level.

Michiel
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Re: Willingness to Accept and price variable in relative ter

Postby Insa » Fri Oct 23, 2020 6:44 pm

Thank you very much, this helps a lot!
Insa
 
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