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Heterogeneity and attribute non-attendance in preferences for peatland conservation

Grammatikopoulou, Ioanna, Pouta, Eija, Artell, Janne
Forest policy and economics 2019 v.104 pp. 45-55
case studies, decision making, issues and policy, land management, models, peatlands, zero tolerance
Choice making is often susceptible to processing strategies, such as attribute non-attendance (ANA) where respondents make their choices based on only a subset of attributes. Such strategies can be the reason for heterogeneity in preferences and need to be detached from regular taste heterogeneity. A common approach to accommodate heterogeneity in the presence of ANA strategies is the Latent Class (LC) confirmatory approach where zero sensitivity in attributes is imposed through fixed to zero values. In case of no constraints, the approach is referred to as a LC exploratory one. Outcomes from past literature have been mixed about the comparative performance of these two approaches. In this study we apply both approaches in order to study the heterogeneity in preferences for peatland conservation. We assume ANA strategies based on the specifics of our case study which are related to contradictories in the use of peatlands. We find that the LC confirmatory model resulted in a better performance than the LC exploratory model. Almost one out of every two respondents behaved in a non-standard way during the decision-making process. Both approaches reached almost the same suggestions about the relative importance of peatland attributes while the exploratory approach provided overestimated welfare benefits compared to the confirmatory approach. This is due to the proportion of people that placed no importance on the tax parameter revealed by the confirmatory model. We conclude that the way that a confirmatory model is specified is a crucial decision to make during the studying of ANA, and that in case of strong assumptions of such strategy a confirmatory model, if properly specified, it provides a good representation of heterogeneity. Ignoring ANA strategies may lead to misleading welfare estimates but at the same time it is challenging to obtain solid and comprehensive benefit estimates for policy implications, particularly in case of cost non-attendance.