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
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: Suggested Citation
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