Environmental pricing of externalities from different sources of electricity generation in Chile

The rapid increase in electricity demand in Chile means a choice must be made between major investments in renewable or non-renewable sources for additional production. Current projects to develop large dams for hydropower in Chilean Patagonia impose an environmental price by damaging the natural environment. On the other hand, the increased use of fossil fuels entails an environmental price in terms of air pollution and greenhouse gas emissions contributing to climate change. This paper studies the debate on future electricity supply in Chile by investigating the preferences of households for a variety of different sources of electricity generation such as fossil fuels, large hydropower in Chilean Patagonia and other renewable energy sources. Using Double Bounded Dichotomous Choice Contingent Valuation, a novel advanced disclosure method and internal consistency test are used to elicit the willingness to pay for less environmentally damaging sources. Policy results suggest a strong preference for renewable energy sources with higher environmental prices imposed by consumers on electricity generated from fossil fuels than from large dams in Chilean Patagonia. Policy results further suggest the possibility of introducing incentives for renewable energy developments that would be supported by consumers through green tariffs or environmental premiums. Methodological findings suggest that advanced disclosure learning overcomes the problem of internal inconsistency in SB-DB estimates.

Outperformance in exchange-traded fund pricing deviations: Generalized control of data snooping bias

An investigation into exchange-traded fund (ETF) outperforrnance during the period 2008-2012 is undertaken utilizing a data set of 288 U.S. traded securities. ETFs are tested for net asset value (NAV) premium, underlying index and market benchmark outperformance, with Sharpe, Treynor, and Sortino ratios employed as risk-adjusted performance measures. A key contribution is the application of an innovative generalized stepdown procedure in controlling for data snooping bias. We find that a large proportion of optimized replication and debt asset class ETFs display risk-adjusted premiums with energy and precious metals focused funds outperforming the S&P 500 market benchmark. 

Testing preference formation in learning design contingent valuation (LDCV) using advanced information and repetitive treatments

Policymakers have largely replaced Single Bounded Discrete Choice (SBDC) valuation by the more statistically efficient repetitive methods; Double Bounded Discrete Choice (DBDC) and Discrete Choice Experiments (DCE) . Repetitive valuation permits classification into rational preferences: (i) a priori well-formed; (ii) consistent non-arbitrary values “discovered” through repetition and experience; (Plott, 1996; List 2003) and irrational preferences; (iii) consistent but arbitrary values as “shaped” by preceding bid level (Tufano, 2010; Ariely et al., 2003) and (iv) inconsistent and arbitrary values. Policy valuations should demonstrate behaviorally rational preferences. We outline novel methods for testing this in DBDC applied to renewable energy premiums in Chile.

Food fraud and consumers' choices in the wake of the horsemeat scandal

Purpose – In 2012, the European food industry was hit by a food fraud: horsemeat was found in
pre-prepared foods, without any declaration on the package. This is commonly referred to as the
“horsemeat scandal”. The purpose of this paper is to investigate consumers’ preferences across
Europe for a selected ready meal, ready to heat (RTH) fresh lasagne, to consider whether the effects of
potential food frauds on consumers’ choices can be mitigated by introducing enhanced standards of
RTH products.
Design/methodology/approach – An online survey was administered to 4,598 consumers of RTH
lasagne in six European countries (Republic of Ireland, France, Italy, Spain, Germany and Norway),
applying discrete choice experiments to estimate consumers’ willingness to pay for enhanced food
safety standards and highlight differences between countries.
Findings – Many similarities across countries emerged, as well as some differences. Consumers in
Europe are highly concerned with the authenticity of the meat in ready meals and strongly prefer to
know that ingredients are nationally sourced. Strong regional differences in price premiums exist for
enhanced food safety standards.
Originality/value – This research adds relevant insights in the analysis of consumers’ reaction to
food fraud, providing practical guidelines on the most appropriate practices that producers should
adopt and on the information to reduce food risk perception among consumers. This would prove
beneficial for the food processing industry and the European Union. The survey is based on a
representative sample of European consumers making this the largest cross-country study of this kind.