Is WTP an attitudinal measure? Empirical analysis of the psychological explanation for contingent values

Contingent valuation has been given a psychological interpretation, by Kahneman and colleagues, that claims willingness to pay bids represent psychological attitudes rather than personal economic valuations. Evidence reported here shows the need to qualify the role of this attitudinal explanation. In contradiction to the attitudinal hypothesis, the decision to bid zero or positive appears to represent a complex psychological appraisal. Furthermore, evidence of bid clustering on currency denominations implies fundamental differences concerning how people respond to a monetary scale. Whether interpreted as charitable contributions or imprecise welfare estimates there are serious implications for how economists interpret and use stated preference responses.

► Kahneman’s hypothesis on willingness to pay under environmental contingent valuation.
► Environmental attitudes as determinants of hypothetical willingness to pay.
► We find stated payments represent a complex psychological appraisal beyond attitudes.
► In addition, bid clustering indicates differential treatment of the monetary scale.
► Bids may be interpreted as poor welfare estimates or charitable contributions.