Using Stated-Preference Questions to Investigate Variation in Willingness to Pay for Preserving Marble Monuments: Classical Heterogeneity and Random Parameters

February, 2002


The thousands of trips to Washington D.C. each year to visit its monuments reveal significant use value for these cultural resources. Focus-group and survey responses indicate passive use value is also significant and likely more important to many people than use value. The goal of this paper is three-fold: to estimate mean willingness to pay (WTP) for the preservation of these cultural resources, to determine the extent to which individual WTP varies, and to try to explain WTP variation as a function of individual characteristics such as age, income, gender, and ethnicity. The data are responses to hypothetical pairwise choices. Each sampled individual was asked to choose between two monument preservation programs. The question was repeated ten times with varying costs and preservation levels across the alternatives. Some of these pairs included the status quo as one of the alternatives. Comparing choice pairs with referendum CVM, referendum CVM can be viewed as a single choice pair where one of the alternatives is the status quo. Asking each individual multiple choice questions facilitates the investigation of preference heterogeneity. Preference heterogeneity is incorporated into a discrete-choice random utility model by interacting characteristics of the preservation program with characteristics of the individual and by including random parameters. The results indicate significant WTP for the preservation of these monuments and significant variation in WTP. A significant part of the variation is explained by age, income category, gender, and ethnicity.

We thank Anna Alberini, Bill Breffle, and Nick Flores for comments and suggestions on earlier drafts, and Ken Train for making his simulation program that admits correlations available to us.

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