Testing for Hypothetical Bias in a Choice Experiment Using a Local Public Good: Riparian Forest Restoration

Abstract

The persistence of hypothetical bias in the contingent valuation method for valuing environmental goods has spurred interest in the use of choice experiments as an alternative stated preference method. Choice experiments have been hypothesized to be less prone to hypothetical bias than the more common contingent valuation method. This research investigates potential hypothetical bias in a choice experiment study valuing riparian forest restoration activities in the state of New Mexico, U.S.A.. Findings indicate that choice experiments also demonstrate evidence of hypothetical bias. This result occurs using a relatively homogenous sample and under what might be argued to be likely conditions for minimizing potential bias in the for the valuation of environmental goods: (1) utilizing a local public good that participants have some familiarity with and (2) using only the preferences of individuals who believed their responses could have an impact on policy decisions.