Introduction
Contingent Valuation
Method is one of the forms of survey in which people are directly asked about
their suggestions regarding some specific service. This survey is done to find
out both the positive and negative effects of the services. Use and non use
values can be ascertained through this method. Survey says that non use values
are mostly judged through Contingent Valuation Method (Stewart, O’Shea,
Donaldson and Shackley 2002). It helps to find out easily that the said method
will suit the requirements or not. Surveys always works the best to find out
the apt method which one will be applicable and also prior queries makes the
survey holders or method creators to easily understand the impact of such
changes.
Overview and Purpose
In this method, a survey
is conducted in which people are asked that how much they want to spend for a
particular service which will be provided to them by an organization or
institution. These services can be related to anything which will be catered to
public as a whole as some specific environmental service; health service,
economic or postal, it can be anything. The services mentioned during the
survey does not always that they are existing or will start soon; the
situations are mostly hypothetical. There is a reason behind naming this method
as contingent valuation because contingent in literal means subject to change
and hence the opinion of the public becomes very much important to bring the
change. During the survey people are asked to give their opinion about the
amount of money they want to spend towards specific environmental service. Most
of the decisions depend upon the willingness of the people participating in the
survey, like do they really agree in spending money for these particular
services. The survey also helps to find out the negative effect of making the
services chargeable; will those be feasible enough for the public or the things
will go in vain (Krupnick et al. 2002).
Contingent Valuation
Method is also known as ‘Stated Preference’ because in this process people are
directly asked to state their views. Stating views so directly in its own
becomes a very convenient approach without keeping any doubts in people’s mind.
The greatest positive approach of Contingent Valuation is that rather just
observing public’s view, Contingent Valuation does exactly what public wants to
do. They never go against the majority of the people and this is what strength
of this survey becomes (Smith 2000). The question arises that why this kind of
approach or survey is conducted. This survey is conducted to check out the
economic values of the environmental serviced which are generally of non use
nature or also commonly known as passive uses. These uses can be of basic life
support system like eco system health or bio diversity. Hence these are passive
uses, so estimating their total worth just becomes tricky and the actual cost
estimation also becomes a tricky task. Public will never openly quote the
actual amount one will like to invest in these kind of services which can also
be ascertained by their behaviour. So it becomes necessary to make an open
survey where people will come forward to express their needs and will make an
open price quotation with the help of Contingent Valuation Survey (Smith 2003).
Drawbacks
Like every methods or
survey, Contingent Valuation Method also comes with some short falls. This
method of survey has always been controversial because of its non existing and
hypothetical situations. The situations created here are not real and it is
hypothetical which means that the situations are not real and they are made.
Hence there are chances of confusion because it will leave people in a confused
state of action because they do not understand the actual outcomes of these
processes. It is also noticed that many ecologists, psychologists and
sociologists do not actually take this survey seriously and think the dollar
estimates which comes contingent valuation method is not valid and can never be
taken into actual accounts (Luchini, Protière and Moatti 2003).
Application of CV
Method
Firstly the valuation
problem comes into question like what is the exact service which needs
valuation calculation. The type of service and what other things come into
those are the actual question. How does that service help people and how much
is that necessary is also again a topic to think about. Then comes how will be
the survey carried like in phone, mail or person. If done in mail or phone what
will be the basic and initial question and how to approach people with mail or
phones and what will be the right time of approaching. In general it is noticed
that in person interviews are much more feasible as compared to phone or mails.
A high chance of ignoring exists in mail or phone and which is not traceable
also from anywhere (Smith 2000).
On the other hand, it is
also observed that when people are interviewed in person they are more likely
to complete a long survey since it is a direct method; whenever surveys take
form of indirect method, completion of the whole survey questions will be of
minimum number and maximum will be left half completed. While conducting these
surveys, cost effectiveness must be kept in mind because conducting a survey
will also attract certain amount of expenses. In person survey is said to be
more costly than phone or mails however it can be customised accordingly to the
needs of the service. From all the mentioned processes we will get the final
quotes and thus will come the stage of implementing of the process. The implementation
will solely depend on the pre testing of the procedures and will be applied
after proper checks and confirmation that this process will be beneficial for
the people and their well being (Ready, Navrud and Dubourg 2001).
CV Method based on MTP
As discussed above also
the contingent valuation method discuss the approach of willingness to pay; the
willingness to pay and how much they want to pay is the main limelight of this
approach. Now here comes the evaluation of this approach in Health Care
Interventions and how people will react in applying this method of surveys in
health care centres. Health care systems being an important part of
environment, also needs equal attention from this valuation and here we will
discuss the actual scenario and how people will react to this approach which is
linked with critical issue like health centres (Smith 2000). Willingness to pay
method is chosen over other methods like time trade off and standard gamble
methods; choosing over the other two methods were very much significant by
analysis which were done previously. And the main reason behind choosing the
WTP method is that beyond health factors, it also caters to some other areas
like provision of information related to the services and the main issues related
to the process of care (Ryan and Watson 2009).
This scenario can be best
explained with an example regarding one particular issue or disease. Here we
can take an example of Alzheimer’s disease; Alzheimer’s disease is a mental
condition where a person tends to forget gradually everything, memory loss is
the final stage of Alzheimer’s disease. With each passing day, the Alzheimer’s
disease is spreading and we can see our family members suffering through it.
Alzheimer’s disease is one of the expensive diseases in U.S after heart disease
and cancer. The cost is on higher side for this disease, due to the costs most
of the groups associated with AD wants to make a forum which can help in early
detection of AD, for all these issues help from the society, public help is
needed in this case (Smith 2003). People are welcomed to form a group and come
forward to any kind of queries and help. All these claims clash with the need
to reduce the health costs. New programs are to be introduced keeping in mind
the economic evaluation and also programs provided by the National Health Care
Centre. It is also important the evaluation of insurance measures and how it
can help the needy ones (Krupnick et al. 2002 ).
The Willingness to pay
method becomes very essential during this process; ascertaining the actual cost
will be incurred and how much people will like to invest in the process. The
main advantage of WTP process is that it contains all utility components and
also follows subjective valuations. The WTP method might have some
disadvantages regarding other environmental issues; but in case of health care
system this method is believed to be the best approach as it evaluates the
actual costs which the patients or their care takers are willing to give and in
many medical conditions costing matters initially and then the processes can be
implemented and started after keeping in mind all the actual expenses (Luchini,
Protière and Moatti 2003).
Different processes and
health care interventions are taken into consideration and then estimated costs
and budgets which aim for releasing the burden of AD patients; the evaluation
of these processes helps the patients and health care centres to find out the
expected estimates needed to cure the disease. The benefits of all the processes
are chalked and drafted and then processed Contingent valuation method,
individual’s WTP is valued much more than group discussions (Stewart, O’Shea,
Donaldson and Shackley 2002).
The maximum amount a
person can contribute is the opinion from the individual’s point of view. The
surveys are done on the basis initial information collected together and then
formed in a sample of questionnaire and the survey is done accordingly. In this
scenario the survey is done regarding the areas in which and how the Alzheimer’s
disease patients can educate themselves and then the amount of dollar they are
ready to spend. Since AD is one of the expensive treatments; some benefits are
also to be given to the needy ones like compensation or reimbursements. The
compensations and reimbursements how they must be provided are also asked in
the survey and then a firm decision is being taken (Ready, Navrud and Dubourg
2001).
Contingent Valuation
method is mostly done in hypothetical situations; however this situation of AD
is not hypothetical though but the implications about which the survey is done
that is hypothetical. In this scenario, the situation exists but the way to
tackle the situation and how it can help individuals is the main concern. The
survey consists of some basic queries and how the people want to solve the
situations by giving their ideas and how much economically they want to
contribute. Both open ended and close ended questions are kept for the better
understandings of the methods and the procedure of payments. Hence, this is the
simplest of survey and the results can also be well evaluated by judging and
keeping in mind the individual’s preference. So the Willingness to pay method
is the best way to evaluate pros and cons of a method which can be implemented later
for the benefit of all (Ryan and Watson 2009).
Conclusion
Apart from the above
discussions, the benefits of Contingent Valuation Method are also important to
know; this method is way more flexible than others because the survey samples
can be changed and tailored according to the needs of the situations. And
moreover when the situation comes for the goods and services which are already
known by many, then the process becomes much easier and smoother. Contingent
valuation uses all types of methods like existence values, optional values and
bequest values, making the process further more convenient. The nature and
study of Contingent valuation is easy to understand and can be approached
easily in terms of surveying.
List of References
Krupnick, A., Alberini,
A., Cropper, M., Simon, N., O’brien, B., Goeree, R. and Heintzelman, M., 2002.
Age, health and the willingness to pay for mortality risk reductions: a
contingent valuation survey of Ontario residents. Journal of risk and
Uncertainty, 24(2), pp.161-186.
Luchini, S., Protière, C.
and Moatti, J.P., 2003. Eliciting several willingness to pay in a single
contingent valuation survey: application to health care. Health Economics,
12(1), pp.51-64.
Ready, R.C., Navrud, S.
and Dubourg, W.R., 2001. How do respondents with uncertain willingness to pay
answer contingent valuation questions?. Land economics, 77(3),
pp.315-326.
Ryan, M. and Watson, V.,
2009. Comparing welfare estimates from payment card contingent valuation and
discrete choice experiments. Health economics, 18(4), pp.389-401.
Smith, R.D., 2000. The
discrete-choice willingness-to-pay question format in health economics: should
we adopt environmental guidelines?. Medical Decision Making, 20(2),
pp.194-204.
Smith, R.D., 2003.
Construction of the contingent valuation market in health care: a critical
assessment. Health economics, 12(8), pp.609-628.
Stewart, J.M., O’Shea,
E., Donaldson, C. and Shackley, P., 2002. Do ordering effects matter in
willingness-to-pay studies of health care?. Journal of health economics,
21(4), pp.585-599.
