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2003-03-01 | Peer Reviewed

Using Choice Experiments for Non-Market Valuation

Alpízar, Francisco, Fredrik Carlsson and Peter Martinsson. 2003. “Using Choice Experiments for Non-Market Valuation.” Economic Issues 8:1: 83-110.
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Choice experiments are becoming ever more frequently applied to the valuation of non-market goods. The purpose of this paper is to give a detailed description of the steps involved in a choice experiment and to discuss the use of this method for valuing non-market goods.

This paper provides the latest research developments in the method of choice experiments applied to valuation of non-market goods. Choice experiments, along with the, by now, wellknown contingent valuation method, are very important tools for valuing non-market goods and the results are used in both cost-benefit analyses and litigations related to damage assessments. The paper should provide the reader with both the means to carry out a choice experiment and to conduct a detailed critical analysis of its performance in order to give informed advice about the results. A discussion of the underlying economic model of choice experiments is incorporated, as well as a presentation of econometric models consistent with economic theory. Furthermore, a detailed discussion on the development of a choice experiment is provided, which in particular focuses on the design of the experiment and tests of validity. Finally, a discussion on different ways to calculate welfare effects is presented.