TINKERING WITH VALUATION ESTIMATES: IS THERE A FUTURE FOR WILLINGNESS TO ACCEPT MEASURES?

electricity cost is not surprising. In this study average electricity bill reductions were only about
$18 per month. However, it is important to stress that the scenarios presented are thought to be
very realistic given projected conditions for electricity deregulation in New England (Harper,
2000).

Comparison and Discussion of WTA and WTP Results

That WTA and WTP would vary widely is no surprise, given past empirical studies.
Table 3 illustrates that this finding was also the case in the current study. As noted, the ratio of
WTA/WTP ranged from about 12 to 13. Different calculations were performed; WTP1 and
WTA1 are derived using the mean variable values from the individual data sets, while WTP2 and
WTA2 combine the data sets and use the joint sample means.⁴

The means ratio of 12-13 is within the range of previous studies, as found by McConnell
and Horowitz (2000). The value of WTP1 of $11.06/month is comparable to previous studies of
visibility valuation. What is more troubling is the problem in calculating median WTA. While
median WTP of $11.07/month is quite similar to mean WTP, we were basically unable to
calculate median WTA (in fact, the estimate “exploded,” giving implausible estimates in the
range of several million dollars). This was likely due to the inability of the BID variable to
explain much of the variability in the WTA model, as the coefficient was statistically not
significant. In effect, this means that the variance of the coefficient of the BID variable in the
WTA model was quite high (relative to the coefficient size). It also brings into question the
whether the means ratio WTA/WTP can be interpreted with any degree of confidence. The

⁴Log results were essentially identical to linear results in terms of statistical significance of
coefficients. As with the linear model, the coefficient of the BID variable was not statistically
significant.

11

<<   8   9   10   11   12   13   14   >>

More intriguing information