Working Paper: NBER ID: w30433
Authors: Kelsey Jack; Kathryn McDermott; Anja Sautmann
Abstract: Multiple price lists are a convenient tool to elicit willingness to pay (WTP) in surveys and experiments, but choice patterns such as “multiple switching” and “never switching” indicate high error rates. Existing measurement approaches often do not provide accurate standard errors and cannot correct for bias due to framing and order effects. We propose to combine a randomization approach with a random-effects latent utility model to detect bias and account for error. Data from a choice experiment in South Africa shows that significant order effects exist which, if uncorrected, would lead to distorted conclusions about subjects’ preferences. We provide templates to create a multiple price list survey instrument in SurveyCTO and analyze the resulting data using our proposed methods.
Keywords: willingness to pay; multiple price lists; choice errors; randomization; latent utility model
JEL Codes: C91; C93; D46; O12; Q51
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| MPL can effectively measure WTP due to repeated choice data (C35) | WTP measurement (L95) |
| Failure to correct for biases (C83) | WTP measurement (L95) |
| Randomizing the order of binary choices within MPL (C69) | WTP measurement (L95) |
| Utilizing a random-effects latent utility model (C51) | average WTP and dispersion of individual WTP values (D11) |
| Significant order effects detected (C69) | misleading conclusions about preferences (D11) |
| Proposed methodology (randomization and latent utility modeling) (C91) | accurate WTP measurement (C13) |