Question

1. How is the discrete choice experiment method different from the contingent valuation method? What are some relative advantages of the discrete choice experiment method as compared to the contingent valuation method? Can you think of any examples where the contingent valuation method may be more practical than the discrete choice experiment method?

Answer 1

SOLUTION :

Discrete choice experiments v/s contingency valuation method

Discrete choice experiments (DCEs) are a quantitative technique for eliciting preferences that can be used in the absence of revealed preference data. The method involves asking individuals to state their preference over hypothetical alternative scenarios, goods or services. Each alternative is described by several attributes and the responses are used to determine whether preferences are significantly influenced by the attributes and also their relative importance. DCEs are widely used in high-income contexts and are increasingly being applied in low- and middle-income countries to consider a range of policy concerns. This paper aims to provide an introduction to DCEs for policy-makers and researchers with little knowledge of the technique. We outline the stages involved in undertaking a DCE, with an emphasis on the design considerations applicable in a low-income setting.

In case of Contingent choice method asks the respondent to state a preference between one group of environmental services or characteristics, at a given price or cost to the individual, and another group of environmental characteristics at a different price or cost. Because it focuses on tradeoffs among scenarios with different characteristics, contingent choice is especially suited to policy decisions where a set of possible actions might result in different impacts on natural resources or environmental services. For example, improved water quality in a lake will improve the quality of several services provided by the lake, such as drinking water supply, fishing, swimming, and biodiversity. In addition, while contingent choice can be used to estimate dollar values, the results may also be used to simply rank options, without focusing on dollar values.