On-Site Sampling in Economic Valuation Studies

Abstract: A commonly used sampling design in economic valuation studies is on-sitesampling. If this sampling design is used, the sampling inclusion probabil-ities may be correlated with respondents’ valuations, invalidating welfaremeasures derived from estimates of the probit model. This problem is re-ferred to a length-bias, a problem discovered in other fields of applicationof statistics.The first paper in this thesis outlines different application fields thathave length-bias problems and the suggested model solutions in the litera-ture are presented.The second paper of this thesis proposes a model based on the bivariateordinal probit, a model that can be used to analyze binary choice CV datagathered by on-site sampling. The models is presented, the log-likelihoodis derived, and the properties of the MLE’s are illustrated using a smallsimulation study. The simulation results show the proposed estimator tobe an interesting alternative.