Thinking and Deciding

THE MEASUREMENT OF UTILITY 335
The study involved a personal interview with each respondent. The interviewer
used words and pictures to describe the damage done by the spill and how spills coud
be prevented by using escort ships and other means. The most critical parts of the
interview included the following:
If the program was approved, here is how it would be paid for.
All of the oil companies that take oil out of Alaska would pay a special
one timetax .... Households like yours would also pay a special one
time charge that would be added to their federal taxes ....
Because everyone would bear part of the cost, we are using this survey
to ask people how they would vote if they had the chance to vote on the
program. . . .
Of course, whether people would vote for or against the escort ship program
depends on how much it will cost their household. At present,
government officials estimate the program will cost your household a
totalof$X....
If the program cost your household a total of $X would you vote for the
program or against it?
The value of $X was either $10, $30, $60, or $120 for different respondents. Respondents
who said yes were then asked about a higher amount (for example, $30,
if the respondent would pay $10), and those who said no were asked about a lower
amount. The method of asking for a yes-no vote does not actually tell how much
each respondent is willing to pay. It can only tell whether the amount is more or
less than each of the two values used. With many respondents, the researchers could
estimate the median (middle) critical value, which ranged from $27 to $46 depending
on how the estimate was made. In other CV studies, respondents are often asked
outright how much they would be willing to pay, at most, for some program or good.
The CV method is expensive. Even when respondents provide a number, the
time required is large. Of course it is possible to modify the method and ask about
several goods in one interview, but this is rarely done in practice. Researchers feel
that they must specify each good with great care, and that takes as much time as most
respondents are willing to spend. When, after half an hour, the respondent specifies
only a vote, so that we do not even know the number she would provide, the method
is more expensive still. Even more respondents are required in order to estimate the
median. CV has still other problems, some of which are common to other methods
too.
Insensitivity to quantity
For one thing, CV responses are insensitive to quantity. People are not willing to pay
much more to prevent ten oil spills per year than to prevent one. Unless their price
is very high, so that it dents significantly into their wealth, they should be willing to