How Does the Cost Vector Affect Payment Consequentiality in a Binary Choice Contingent Valuation Survey?

Abstract

Payment consequentiality should improve the validity of welfare estimates in stated preference surveys according to a growing body of research. In this paper, we study whether the type of amounts (precision, parity) that composes the cost vector affects payment consequentiality. Our experiment consists in a binary choice survey on renewable energy where the cost amounts range between 0.5 and 25 euros. For small amounts, we find that precision increases payment consequentiality. For larger amounts, even numbers perform better than odd numbers. Our results suggest that the type of cost amount (e.g., even/odd, general/precise) should be carefully considered by the analyst.