Reference Point Effects in Eliciting Values of Environmental Goods, 1988-1990: [Oregon] (ICPSR 6042)

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The purpose of this study was to examine the effects of an individual's reference point in making a decision concerning the values of environmental goods. Empirical research in behavioral decision-making has revealed that economic prospects are valued in terms of their departure from a reference point adopted when a decision is made. Three central questions guided the research: (1) Under what conditions will a reference point be adopted? (2) How important, in terms of its overall influence on decision-making, is the reference point effect likely to be? and (3) What signals or indicators might a decision-maker look for as cues to the presence and strength of the effect? Six problems were used in this study. Each problem presented the possibility of an improvement, at some cost, over the status quo and asked the subject to indicate the desirability of the improvement on a seven-point scale. Each problem consisted of a present form and a past form. In each pair, the past form was the same as the present form except that additional information was given concerning some earlier status of the measure in question. Thus, for all problems, the present form offered an improvement whereas the past form reframed the improvements as the restoration of a previous loss. Three of the problem pairs (River Quality, Air Quality, and Auto Emissions) were realistic in the sense that the extra information included in the past form was a true statement about previous conditions, a fact known to the subjects before the experiment started. Three fictional problem pairs were used to test the hypothesis that the change in reference position would be largest when subjects had no prior knowledge of the past status. The fictional problems posed were: Detergent (atmospheric pollutants released during their manufacture), Public Health (whether a vaccination program should be instituted to combat an infectious disease), and Operations (utilizing a better hospital for treating the infectious disease). The unit of analysis was the volunteer subject answering the questionnaire.

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