Precision of dichotomous choice contingent valuation welfare measures: some simulation results

The purpose of this research is to examine the roles of individuals' heterogeneous economic factors and model misspecification in dichotomous choice contingent valuation welfare measurement. Willingness to pay for an improvement of environmental quality is studied. Simulation results indicate that the precision of welfare estimates increases with individuals' income levels and decreases with the price of the quality-related good. The dependence of the consumption of the quality-related good on the environmental quality also affects the reliability of welfare estimates.