DESIGN AND ANALYSIS OF CONTINGENT VALUATION SURVEYS USING THE NESTED TOBIT-MODEL

Contingent valuation surveys have become an important tool in placing monetary values on non-market good, and amenities. Many policy issues involve evaluation of several alternatives such as different environme ntal quality levels, different levels of risk, etc. Contingent valuati on then involves asking the respondent a sequence of nested questions. Asking and analyzing a nested sequence of questions is an efficient a pproach to data gathering and preference revelation. The resultant seq uentially censored data set cannot be efficiently analyzed with the st andard regression models like the Tobit or nested logit models. The ne sted Tobit model is proposed as an efficient and consistent method of estimating regressions using sequentially censored data. An empirical application suggests greater efficiency in comparison to the Heckman t wo-stage procedure.