Heterogeneity and emotions in the valuation of non-use damages caused by oil spills

Oil spills are capable of causing major environmental insults that raise the emotional loads of individuals across society. In this paper we consider the role of emotions in heterogeneous responses of individuals in the non-market valuation of an oil prevention program in Spain. Heterogeneity is modeled with a smoothly mixing regression (SMR) model that allows researchers to explain the probability that individuals belong to the latent segments of WTP. The results show that heterogeneity in WTP responses is explained by the specific emotional reactions of individuals (upset, sadness, indifference) rather than by their socioeconomic characteristics. Thus, the investigation of the emotional reactions of individuals can provide useful tools for the design of non-market valuation studies, providing more accurate predictions of the potential behavior of individuals in constructed markets for damage assessment.

[1]  S. Chib.  Bayes inference in the Tobit censored regression model , 1992 .

[2]  Sylvia Kaufmann,et al.  Model-Based Clustering of Multiple Time Series , 2004 .

[3]  J. Geweke,et al.  Smoothly mixing regressions , 2007 .

[4]  J. Q. Smith,et al.  1. Bayesian Statistics 4 , 1993 .

[5]  J. Tangney,et al.  Shame and Guilt , 2002 .

[6]  G. Loewenstein.  Emotions in Economic Theory and Economic Behavior , 2000 .

[7]  A. Leiserowitz.  Climate Change Risk Perception and Policy Preferences: The Role of Affect, Imagery, and Values , 2006 .

[8]  K. Glenk,et al.  One model fits all? - On the moderating role of emotional engagement and confusion in the elicitation of preferences for climate change adaptation policies , 2011 .

[9]  Robin Gregory,et al.  The role of affect in the WTA/WTP disparity , 2003 .

[10]  M. Loureiro,et al.  Economic Valuation of Environmental Damages due to the Prestige Oil Spill in Spain , 2009 .

[11]  P. Slovic,et al.  The affect heuristic , 2007, European Journal of Operational Research.

[12]  David Watson,et al.  The PANAS-X manual for the positive and negative affect schedule , 1994 .

[13]  A. Damasio.  Descartes’ Error. Emotion, Reason and the Human Brain. New York (Grosset/Putnam) 1994. , 1994 .

[14]  John Geweke,et al.  Interpretation and inference in mixture models: Simple MCMC works , 2007, Comput. Stat. Data Anal..

[15]  W. Michael Hanemann,et al.  Valuing the Environment through Contingent Valuation , 1994 .

[16]  G. Harrison.  NEUROECONOMICS: A CRITICAL RECONSIDERATION , 2008, Economics and Philosophy.

[17]  P. Kanske,et al.  On the Influence of Emotion on Conflict Processing , 2012, Frontiers in Integrative Neuroscience.

[18]  J. Geweke,et al.  Mixture of normals probit models , 1997 .

[19]  J. Araña,et al.  The Dynamics of Preference Elicitation after an Environmental Disaster: Stability and Emotional Load , 2012, Land Economics.

[20]  R. Kopp,et al.  Contingent Valuation and Lost Passive Use: Damages from the Exxon Valdez Oil Spill , 2003 .

[21]  B. Fredrickson,et al.  Measurement issues in emotion research. , 1999 .

[22]  A. Damasio.  Descartes' error: emotion, reason, and the human brain. avon books , 1994 .

[23]  Susana Conejero,et al.  The Impact of the Madrid Bombing on Personal Emotions, Emotional Atmosphere and Emotional Climate , 2007 .

[24]  D. Kahneman,et al.  Representativeness revisited: Attribute substitution in intuitive judgment. , 2002 .

[25]  Richard T. Carson,et al.  Contingent Valuation: A Comprehensive Bibliography and History , 2012 .

[26]  M. Hanemann,et al.  Unrevealing Public Preferences for Climate Change Policies in Spain: A Hybrid Mixture Model , 2012 .

[27]  R. Frank.  Passions Within Reason: The Strategic Role of the Emotions , 1990 .

[28]  Joel L. Horowitz,et al.  Testing a Parametric Model Against a Semiparametric Alternative , 1994, Econometric Theory.

[29]  L. F. Barrett,et al.  Handbook of emotions, 2nd ed. , 2000 .

[30]  S. Chib,et al.  Bayesian analysis of binary and polychotomous response data , 1993 .

[31]  D. Kahneman,et al.  Well-being : the foundations of hedonic psychology , 1999 .

[32]  M. Hanemann,et al.  Emotions and decision rules in discrete choice experiments for valuing health care programmes for the elderly. , 2008, Journal of health economics.

[33]  Trudy Ann Cameron,et al.  A New Paradigm for Valuing Non-market Goods Using Referendum Data: Maximum Likelihood Estimation by Censored Logistic Regression' , 1988 .

[34]  S. Frühwirth-Schnatter.  Markov chain Monte Carlo Estimation of Classical and Dynamic Switching and Mixture Models , 2001 .

[35]  J. Heckman,et al.  A Method for Minimizing the Impact of Distributional Assumptions in Econometric Models for Duration Data , 1984 .

[36]  J. Araña,et al.  Flexible mixture distribution modeling of dichotomous choice contingent valuation with heterogenity , 2005 .

[37]  Thomas A. Grigalunas,et al.  Estimating the Cost of Oil Spills: Lessons from the Amoco Cadiz Incident , 1986, Marine Resource Economics.

[38]  Peter E. Rossi,et al.  Bayesian Statistics and Marketing , 2005 .

[39]  Matthew J. Kotchen,et al.  Voluntary- and Information-Based Approaches to Environmental Management: A Public Economics Perspective , 2013, Review of Environmental Economics and Policy.

[40]  W. Michael Hanemann,et al.  THE STATISTICAL ANALYSIS OF DISCRETE-RESPONSE CV DATA , 1996 .

[41]  J. Forgas.  Mood and judgment: the affect infusion model (AIM). , 1995, Psychological bulletin.

[42]  M. Escobar,et al.  Bayesian Density Estimation and Inference Using Mixtures , 1995 .

[43]  Christian Aßmann,et al.  A Bayesian approach to model-based clustering for binary panel probit models , 2011, Comput. Stat. Data Anal..

[44]  Michael D. Robinson,et al.  Belief and feeling: evidence for an accessibility model of emotional self-report. , 2002, Psychological bulletin.

[45]  R. Carson,et al.  Valuing the Preservation of Australia's Kakadu Conservation Zone , 1994 .

[46]  Maria L. Loureiro,et al.  Estimated costs and admissible claims linked to the Prestige oil spill , 2006 .

[47]  G. Loewenstein,et al.  The role of affect in decision making. , 2003 .

[48]  John B. Loomis,et al.  International Public Preferences and Provision of Public Goods: Assessment of Passive Use Values in Large Oil Spills , 2013 .

[49]  Christopher K. Hsee,et al.  Music, Pandas, and Muggers: On the Affective Psychology of Value , 2004, Journal of experimental psychology. General.

[50]  A. Raftery,et al.  How Many Iterations in the Gibbs Sampler , 1991 .

[51]  R. Adolphs.  Recognizing emotion from facial expressions: psychological and neurological mechanisms. , 2002, Behavioral and cognitive neuroscience reviews.

[52]  J. Elster.  Emotions and Economic Theory , 1998 .

[53]  S. Chaiken,et al.  Dual-process theories in social psychology , 1999 .

[54]  J. Cooper.  Optimal Bid Selection for Dichotomous Choice Contingent Valuation Surveys , 1993 .

[55]  Joffre Swait,et al.  Context Dependence and Aggregation in Disaggregate Choice Analysis , 2002 .

[56]  Bruce E. Kaufman.  Emotional arousal as a source of bounded rationality , 1999 .

[57]  P. Slovic,et al.  Affect and decision making: A hot topic , 2006 .

[58]  D. Kahneman,et al.  Heuristics and Biases: The Psychology of Intuitive Judgment , 2002 .

[59]  W. Michael Hanemann,et al.  Welfare Evaluations in Contingent Valuation Experiments with Discrete Responses , 1984 .

[60]  Andreas Nilsson,et al.  The willingness to pay-willingness to accept gap revisited: The role of emotions and moral satisfaction , 2011 .

[61]  P. Slovic,et al.  Affective asynchrony and the measurement of the affective attitude component , 2007 .

[62]  Ronald Bosman,et al.  Emotional Hazard in a Power-to-Take Experiment , 2002 .

[63]  M. Dolores Garza-Gil,et al.  Estimating the short-term economic damages from the Prestige oil spill in the Galician fisheries and tourism. , 2006 .

[64]  Colin Camerer,et al.  Neuroeconomics: How Neuroscience Can Inform Economics , 2005 .

[65]  N. Hanley,et al.  Analysing decision behaviour in stated preference surveys: A consumer psychological approach , 2007 .

[66]  Gershon Ben-Shakhar,et al.  Reciprocity and emotions in bargaining using physiological and self-report measures , 2007 .

[67]  O. Frör.  Bounded rationality in contingent valuation: Empirical evidence using cognitive psychology , 2008 .

[68]  C. Robert,et al.  Estimation of Finite Mixture Distributions Through Bayesian Sampling , 1994 .

[69]  Benjamin E. Hermalin,et al.  A model of the effect of affect on economic decision making , 2008 .

[70]  J. Lerner,et al.  Fear, anger, and risk. , 2001, Journal of personality and social psychology.

[71]  S. Frühwirth-Schnatter.  Estimating Marginal Likelihoods for Mixture and Markov Switching Models Using Bridge Sampling Techniques , 2004 .