Basic considerations for the application of discrete choice experiments: a review

Abstract

The need to allocate an economic value to environmental goods and services resulted in the development of methodologies such as discrete choice experiments, which have gained great relevance in recent years. This review focuses on showing the basic aspects to be considered in the empirical application of the method throughout its entire process, which covers the experimental design, preparation and application of the questionnaire and survey, the economic analysis and welfare measures. For this purpose, the literature on the advances and applications of choice experiments in recent years was reviewed; specifically, we address and discuss the findings on reliability and validity, as well as the scope and limitations of this declared preferences method. Despite the challenges that it faces (complexity of the task of choice and cognitive effort on the part of the interviewees, a situation that is more evident in its applications in developing countries), it is the method preferred by environmental economics researchers so far, since it allows to break down the total value of the commodity or service into the value of its attributes. Furthermore, it provides a more focused approach that is useful for economic assessment, as well as greater advantages for environmental policy decision makers.