VALUATION SURVEYS Summary

When modelling data generated from a discrete choice contingent valuation question, the treatment of zero bids affects the welfare estimates. Zero bids may come from respondents who are not interested in the provision of the public good; alternatively, some zero-bidders may be protesting about the valuation exercise, but hold positive values for the good. In this paper we investigate the effect of different levels of information on zero-bidders on welfare estimates for the population. We find that different strategies of identification may have non-trivial effects. We recommend use of full debriefing questions for zero-bidders, and use of sample selection models to correct for bias caused by protest behaviour. 2Non Technical Summary The contingent valuation method consists in eliciting the reservation price of sampled individuals for some change in the provision of a public good. If negative bids are ruled out, a combination of zero and positive values is elicited. Any members of the population with strictly increasing preferences fo