Protesting or Justifying? A Latent Class Model for Contingent Valuation with Attitudinal Data

FEUNL Working Paper Series No 547

25 Pages Posted: 15 Apr 2010

See all articles by Luis C. Nunes

Luis C. Nunes

Nova School of Business and Economics

Maria Antonieta Cunha-e-Sa

Nova School of Business and Economics

Vladimir Otrachshenko

Nova School of Business & Economics

Livia Maria Madureira

Universidade de Tras-os-Montes e Alto Douro (UTAD)

Date Written: March 25, 2010

Abstract

This article develops a latent class model for estimating willingness-to-pay for public goods using simultaneously contingent valuation (CV) and attitudinal data capturing protest attitudes related to the lack of trust in public institutions providing those goods. A measure of the social cost associated with protest responses and the consequent loss in potential contributions for providing the public good is proposed. The presence of potential justification biases is further considered, that is, the possibility that for psychological reasons the response to the CV question affects the answers to the attitudinal questions. The results from our empirical application suggest that psychological factors should not be ignored in CV estimation for policy purposes, allowing for a correct identification of protest responses.

Keywords: Public goods, quality of institutions, protest responses, contingent valuation, justification bias, latent class model

JEL Classification: C35, C85, Q51

Suggested Citation

Nunes, Luis Catela and Cunha-e-Sa, Maria Antonieta and Otrachshenko, Vladimir and Madureira, Livia Maria, Protesting or Justifying? A Latent Class Model for Contingent Valuation with Attitudinal Data (March 25, 2010). FEUNL Working Paper Series No 547, Available at SSRN: https://ssrn.com/abstract=1589405 or http://dx.doi.org/10.2139/ssrn.1589405

Luis Catela Nunes

Nova School of Business and Economics ( email )

Nova SBE
Rua da Holanda, 1
Carcavelos, 2775-405
Portugal

Maria Antonieta Cunha-e-Sa (Contact Author)

Nova School of Business and Economics ( email )

Campus de Carcavelos
Rua da Holanda, 1
Carcavelos, 2775-405
Portugal

Vladimir Otrachshenko

Nova School of Business & Economics ( email )

Campus de Carcavelos
Rua da Holanda, 1
Carcavelos, 2775-405
Portugal

Livia Maria Madureira

Universidade de Tras-os-Montes e Alto Douro (UTAD) ( email )

Almeida Lucena nº 1
5001-911 Vila Real
United States