Assessing the Public Service Element of Irish Public Broadcasting – The Validity of the Contingent Valuation Method

February, 2002


The contingent valuation method (CVM) has been extensively used to assess the use and non-use value of environmental amenities, and continues to be developed as a tool for this purpose. This paper assesses the possible use of CVM in the analysis of a complex cultural public good – Public Service Broadcasting.

There have been a number of applications of CVM to the valuation of cultural public goods. Recent studies have assessed the Royal Theatre in Copenhagen (Bille-Hansen, 1997), historical sites in Napoli (Santagata and Signorello, 1998) and public libraries in Norway (Aabø and Strand, 2000). CVM has also been used in the analysis of broadcasting. Ehrenberg and Mills (1990) asked respondents for their willingness to pay a subscription charge for BBC services, if the licence fee was abolished. They found that the propensity to pay a subscription charge similar to the level of the licence fee was high, across different scenarios and different respondent characteristics. Also, WTP was found insensitive to price with many respondents willing to purchase BBC services at a charge three times the licence fee. Papandrea (1997) used contingent valuation to ascertain whether viewers value domestic programming content in Australian television, the provision of which was the result of a quota specifying minimum amounts of domestic programming on commercial free-to-air channels. Respondents were asked a valuation question that referred to the estimated cost per household of providing the programming, and followed this with an open-ended question to elicit maximum willingness to pay. The resulting average willingness to pay was only slightly below the average cost, and the median vote was at average cost, which might suggest an anchoring effect.

Free-riding is a problem inherent in the provision of public service broadcasting, which is particularly evident when contribution to the service is voluntary, as in the United States. Schwer and Daneshvary (1995) examined willingness to pay for PBS amongst residents of Las Vegas, finding that a large proportion of their sample (39%) was unwilling to make any contribution. The fact that individuals can easily free-ride when paying for public service broadcasting causes difficulties valuing PSB by contingent valuation. However, a high proportion of individuals unwilling to pay any positive amount for a PSB good may be a reflection of the free-rider issue inherent to provision, rather than an effect induced by the contingent valuation method. A high incidence of zero-bidders has been observed in several WTP studies for less broadly used cultural public goods such as museums and theatres. The central issue is whether the CVM instrument increases the propensity to bid zero.

In this study, we examine the Irish public service broadcaster (PSB), Radio Telefís Éireann (RTÉ). A survey was carried out on residents of County Dublin, to test the applicability of CVM in the valuation the PSB service. We estimate willingness to pay for the public service element of RTÉ, and investigate determinants of variations in WTP as well as WTP over variations in respondent characteristics. The particular remit of the survey was to elicit a very wide range of attitudes and characteristics, in order to assess the nature of the valuations submitted and thereby test the validity of CVM.

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