Measuring Consumers' Willingness to Pay. Which Method fits best?

Gauging the maximum willingness to pay (WTP) of a product accurately is a critical success factor that determines not only market performance but also financial results. A number of approaches have therefore been developed to accurately estimate consumers’ willingness to pay. Here, four commonly used measurement approaches are compared using real purchase data as a benchmark. The relative strengths of each method are analyzed on the basis of statistical criteria and, more importantly, on their potential to predict managerially relevant criteria such as optimal price, quantity and profit. The results show a slight advantage of incentive-aligned approaches though the market settings need to be considered to choose the best-fitting procedure.

Using choice experiments to explore the spatial distribution of willingness to pay for rural landscape improvements

We report findings from a choice experiment survey designed to estimate the economic benefits of policy measures to improve the rural landscape in the Republic of Ireland. Using a panel mixed logit specification to account for unobserved taste heterogeneity we derived individual-specific willingness-to-pay (WTP) estimates for each respondent in the sample. We subsequently investigated the spatial dependence of these estimates. Results suggest the existence of positive spatial autocorrelation for all rural landscape attributes. As a means of benefit transfer, kriging methods were employed to interpolate WTP estimates across the whole of the Republic of Ireland. The kriged WTP surfaces confirm the existence of spatial dependence and illustrate the implied spatial variation and regional disparities in WTP for all the rural landscape improvements investigated.

The marginal willingness-to-pay for attributes of a hypothetical HIV vaccine

This paper estimates the marginal willingness-to-pay for attributes of a hypothetical HIV vaccine using discrete choice modeling. We use primary data from 326 respondents from Bangkok and Chiang Mai, Thailand, in 2008–2009, selected using purposive, venue-based sampling across two strata. Participants completed a structured questionnaire and full rank discrete choice modeling task administered using computer-assisted personal interviewing. The choice experiment was used to rank eight hypothetical HIV vaccine scenarios, with each scenario comprising seven attributes (including cost) each of which had two levels. The data were analyzed in two alternative specifications: (1) best-worst; and (2) full-rank, using logit likelihood functions estimated with custom routines in Gauss matrix programming language. In the full-rank specification, all vaccine attributes are significant predictors of probability of vaccine choice. The biomedical attributes of the hypothetical HIV vaccine (efficacy, absence of VISP, absence of side effects, and duration of effect) are the most important attributes for HIV vaccine choice. On average respondents are more than twice as likely to accept a vaccine with 99% efficacy, than a vaccine with 50% efficacy. This translates to a willingness to pay US$383 more for a high efficacy vaccine compared with the low efficacy vaccine. Knowledge of the relative importance of determinants of HIV vaccine acceptability is important to ensure the success of future vaccination programs. Future acceptability studies of hypothetical HIV vaccines should use more finely grained biomedical attributes, and could also improve the external validity of results by including more levels of the cost attribute.

Tooth replacement for partially dentate elders: a willingness-to-pay analysis

Objectives: The primary aim of this study was to investigate partially dentate elders’ willingness-to-pay (WTP) for two different tooth replacement strategies: using Removable Partial Dentures (RPDs) and, functionally orientated treatment (SDA). The secondary aim was to measure the same patient group’s WTP for dental implants. Methods: Patients who had completed a previous RCT comparing two tooth replacement strategies (RPDs and SDA) were recruited. 59 patients were asked to indicate their WTP for treatment to replace missing teeth in a number of hypothetical scenarios using the payment card method of contingency evaluation coupled to different costs. Data were collected on patients’ social class, longest held occupation, income levels and social circumstances. Results: The median age for the patient sample was 72.0 years (IQR: 71-75 years). Patients who had previously been provided with RPDs indicated that their WTP for this treatment strategy was significantly higher than those patients who had received SDA treatment (Mann-Whitney U Test: p<0.001). This group were also WTP a higher price for SDA treatment than those patients who had previously been treated according to this modality (Mann-Whitney U Test: p=0.005). The results indicated that patients’ age was not correlated with WTP but both social class and current income levels were significantly correlated (Spearman’s rank correlation: p<0.05). Patients in both treatment groups exhibited llittle WTP for dental implant treatment with a median price recorded which was lower than either RPD or SDA treatment. Conclusions: Amongst this patient cohort previous treatment experience had a strong influence on WTP as did social class and current income levels. The patients’ WTP indicated that they did not value dental implants over simpler forms of tooth replacement such as RPDs or a SDA approach.

Tooth replacement for partially dentate elders: a willingness-to-pay analysis

Objectives: The primary aim of this study was to investigate partially dentate elders’ willingness-to-pay (WTP) for two different tooth replacement strategies: using Removable Partial Dentures (RPDs) and, functionally orientated treatment (SDA). The secondary aim was to measure the same patient group’s WTP for dental implants.Methods: Patients who had completed a previous RCT comparing two tooth replacement strategies (RPDs and SDA) were recruited. 59 patients were asked to indicate their WTP for treatment to replace missing teeth in a number of hypothetical scenarios using the payment card method of contingency evaluation coupled to different costs. Data were collected on patients’ social class, longest held occupation, income levels and social circumstances.Results: The median age for the patient sample was 72.0 years (IQR: 71-75 years). Patients who had previously been provided with RPDs indicated that their WTP for this treatment strategy was significantly higher than those patients who had received SDA treatment (Mann-Whitney U Test: p<0.001). This group were also WTP a higher price for SDA treatment than those patients who had previously been treated according to this modality (Mann-Whitney U Test: p=0.005). The results indicated that patients’ age was not correlated with WTP but both social class and current income levels were significantly correlated (Spearman’s rank correlation: p<0.05).Patients in both treatment groups exhibited llittle WTP for dental implant treatment with a median price recorded which was lower than either RPD or SDA treatment.Conclusions: Amongst this patient cohort previous treatment experience had a strong influence on WTP as did social class and current income levels. The patients’ WTP indicated that they did not value dental implants over simpler forms of tooth replacement such as RPDs or a SDA approach.

Tooth replacement for partially dentate elders: a willingness-to-pay analysis

Objectives: The primary aim of this study was to investigate partially dentate elders' willingness-to-pay (WTP) for two different tooth replacement strategies: Removable Partial Dentures (RPDs) and, functionally orientated treatment according to the principles of the Shortened Dental Arch (SDA). The secondary aim was to measure the same patient groups' WTP for dental implant treatment.Methods: 55 patients who had completed a previous RCT comparing two tooth replacement strategies (RPDs (n=27) and SDA (n=28)) were recruited (Trial Registration no. ISRCTN26302774). Patients were asked to indicate their WTP for treatment to replace missing teeth in a number of hypothetical scenarios using the payment card method of contingency evaluation coupled to different costs. Data were collected on patients' social class, income levels and other social circumstances. A Mann-Whitney U Test was used to compare differences in WTP between the two treatment groups. To investigate predictive factors for WTP, multiple linear regression analyses were conducted.Results: The median age for the patient sample was 72.0 years (IQR: 71-75 years). Patients who had been provided with RPDs indicated that their WTP for this treatment strategy was significantly higher (€550; IQR: 500-650) than those patients who had received SDA treatment (€500; IQR: 450-550) (p=0.003). However patients provided with RPDs indicated that their WTP for SDA treatment (€650; IQR: 600-650) was also significantly higher than those patients who had actually received functionally orientated treatment (€550; IQR: 500-600) (p<0.001). The results indicated that both current income levels and previous treatment allocation were significantly correlated to WTP for both the RPD and the SDA groups. Patients in both treatment groups exhibited little WTP for dental implant treatment with a median value recorded which was half the market value for this treatment (€1000; IQR: 500-1000).Conclusions: Amongst this patient cohort previous treatment experience had a strong influence on WTP as did current income levels. Both treatment groups indicated a very strong WTP for simpler, functionally orientated care using adhesive fixed prostheses (SDA) over conventional RPDs. Clinical significance: Partially dentate older patients expressed a strong preference for functionally orientated tooth replacement as an alternative to conventional RPDs.

Willingness-to-pay for infrastructure investments for alternative fuel vehicles

This study investigates potential demand for infrastructure investment for alternative fuel vehicles by applying stated preference methods to a Japanese sample. The potential demand is estimated on the basis of how much people are willing to pay for alternative fuel vehicles under various refueling scenarios. Using the estimated parameters, the economic efficiency of establishing battery-exchange stations for electric vehicles is examined. The results indicate that infrastructural development of battery-exchange stations can be efficient when electric vehicle sales exceed 5.63% of all new vehicle sales. Further, we find a complementary relationship between the cruising ranges of alternative fuel vehicles and the infrastructure established.

Willingness to Pay for Rural Landscape Improvements: Combining Mixed Logit and Random-Effects Models

This paper reports the findings from a discrete-choice experiment designed to estimate the economic benefits associated with rural landscape improvements in Ireland. Using a mixed logit model, the panel nature of the dataset is exploited to retrieve willingness-to-pay values for every individual in the sample. This departs from customary approaches in which the willingness-to-pay estimates are normally expressed as measures of central tendency of an a priori distribution. Random-effects models for panel data are subsequently used to identify the determinants of the individual-specific willingness-to-pay estimates. In comparison with the standard methods used to incorporate individual-specific variables into the analysis of discrete-choice experiments, the analytical approach outlined in this paper is shown to add considerable explanatory power to the welfare estimates.