Ruhr Economic Papers

Ruhr Economic Papers #841

Consequentiality, Elicitation Formats, and the Willingness-To-Pay for Green Electricity: Evidence from Germany

by Mark A. Andor, Manuel Frondel and Marco Horvath

RGS, RUB, RWI, 02/2020, 37 S./p., 8 Euro, ISBN 978-3-86788-975-9 DOI: 10.4419/86788975

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Abstract

Based on hypothetical responses originating from a large-scale survey among about 6,000 German households, this study investigates the discrepancy in willingness-to-pay (WTP) estimates for green electricity across single-binary-choice and open-ended valuation formats. Recognizing that respondents self-select into two groups distinguished by their belief in their answers’ consequences for policy making, we employ a switching regression model that accounts for the potential endogeneity of respondents’ belief in consequences and, hence, biases from sample selectivity. Contrasting with the received literature, we find WTP bids that tend to be higher among those respondents who obtained questions in the openended format, rather than single-binary-choice questions. This difference substantially shrinks, however, when focusing on individuals who perceive the survey as politically consequential.

JEL-Classification: D03, D12, Q48, Q50,

Keywords: Elicitation format; contingent valuation; consequentialism

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