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The effect of protest zeros on estimates of willingness to pay in healthcare contingent valuation analysis

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Abstract

’Protest zeros’ occur when respondents reject some aspect of the contingent valuation (CV) market scenario by reporting a zero value even though they place a positive value on the amenity being valued. This is inevitable even in the best-designed CV study, and, when excluded on an ad hoc basis, may cause a selection bias problem. This could affect the reliability of the willingness to pay (WTP) estimates obtained for preference assessment. Treatment of ‘protest zeros’ in general, and particularly in the context of developing countries, has been rather unsatisfactory. Most case studies employ the Heckman 2-step approach, which is much less robust to co-linearity problems than the Full Information Maximum Likelihood (FIML) estimator.

The main objective of this article is to illustrate a sequential procedure to simultaneously deal with co-linearity and selectivity bias resulting from excluding ‘protest zeros’ in CV analysis. The sequential procedure involves different levels of estimation and diagnostics with the 2-step and FIML estimators; the duration of the procedure depends on the diagnostic test results at each stage of the estimations.

The data used for the analysis were elicited using the conventional dichotomous choice buttressed with an open-ended follow-up question. The survey was designed to elicit households’ WTP for a proposed community-based malaria control scheme in rural Cameroon. In the application context, we found that the different levels of estimation and diagnostics resulted in reliable WTP estimates from the FIML approach, which would obviously have been overlooked in the absence of such diagnostics.

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Notes

  1. The main function of the dam is to increase the volume of water into the River Sanaga that supplies Cameroon with hydroelectricity. The dam is located in the Bamendjim community of the Western Province of Cameroon; however, the artificial lake is found in the Ndop area of the Ngoketunjia Division, Northwest Province, Cameroon.

  2. The study area, which is one of the 13 communities that make up the entire Ndop clan, is located in the Ngoketunjia Division of the Northwest Province, Cameroon. By 2004, Bambalang comprised 15 quarters, with a population estimate of approximately 16 000 inhabitants living some few kilometers away from the lake.

  3. At the time of the survey, $US1=CFA490, based on the official exchange rate for April 2005 from the Bank of Central African States (BEAC).[32]

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Acknowledgements

The authors are extremely grateful to E. Strazzera of DRES and CRENoS, Department of Economics, University of Calgary, Italy, for her technical inputs into the final draft dissertation from which this article is derived. We are equally grateful to two anonymous referees and the Editor, whose useful suggestions, comments and technical inputs have helped enormously to improve the quality of the article. The invaluable guidance from Professors A.O. Okore (late) and Apia E. Okorafor are gratefully acknowledged.

The study received financial support from the African Economic Research Consortium (AERC); however, the views expressed are those of the authors and not of the consortium. Any errors or omissions in the article are the responsibility of the authors and not of the consortium.

The authors have no conflicts of interest that are directly relevant to the content of this article.

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Authors and Affiliations

  1. Environmental Economics Unit, Department of Economics, University of Nigeria, Nsukka, Enugu State, Nigeria

    William M. Fonta & H. Eme Ichoku

  2. School of Economics, University of Nairobi, Nairobi, Kenya

    Jane Kabubo-Mariara

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  1. William M. Fonta
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  2. H. Eme Ichoku
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Correspondence to William M. Fonta.

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Fonta, W.M., Ichoku, H.E. & Kabubo-Mariara, J. The effect of protest zeros on estimates of willingness to pay in healthcare contingent valuation analysis. Appl Health Econ Health Policy 8, 225–237 (2010). https://doi.org/10.2165/11530400-000000000-00000

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