Minimising payment vehicle bias in contingent valuation studies

The payment vehicle is a crucial element in applications of the contingent valuation method because it provides the context for payment. However, in many countries a relative unfamiliarity with the use of tax levies and referenda can affect the plausibility of payment vehicles and lead to payment vehicle bias. The most commonly used approach for determining whether payment bias exists is to use tests of convergent validity. It is demonstrated that simple tests of convergent validity can be ineffective in diagnosing the existence of payment vehicle bias. Payment vehicle bias is found to occur because of differences in the coverage of payment vehicles and doubts about payment being one-off. When respondents are found to be protesting against a particular payment vehicle, the current state of the art approach is to delete them from the sample. In this paper an alternative approach that relies on the recoding of protest responses is proposed.