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Jurnal Ekonomi Malaysia

52 (3) 2018 115 – 128

Does Status Quo Interpretation Affect Welfare Estimates?
Adakah Interpretasi Status Quo Memberi Kesan kepada Anggaran Kebajikan?

Department of Economics and Agribusiness
School of Economics, Finance and Banking
Universiti Utara Malaysia
Sintok 06010 Kedah
MALAYSIA

bakti@uum.edu.my

Department of Economics and Agribusiness
School of Economics, Finance and Banking
Universiti Utara Malaysia
Sintok 06010 Kedah
MALAYSIA

shamsul@uum.edu.my

School of Tourism, Hospitality and Environmental Management
College of Law, Government and International Studies
Universiti Utara Malaysia
Sintok 06010 Kedah
MALAYSIA

hamimi@uum.edu.my

Abstract

In choice experiments (CEs), respondents select their most preferred alternative from a series of choices. One of these alternatives is the status quo (SQ) option, which resembles the current scenario. Previous studies have shown that the way the researcher defines the SQ may be different from how the respondents interpret the same option. Using the case study of white water rafting (WWR) recreation, we investigated the effect of SQ definition on the demand function used to estimate the willingness to pay (WTP) of students who participate in WWR. We applied the confidence interval approach, where WTP values are considered to be significantly different if their confidence intervals do not overlap. We found that the WTP estimates for some attributes (i.e., challenge at the advanced and intermediate levels, and advanced safety) were statistically different. The number of significant estimates suggest that the SQ interpreted by the respondents (as an individual and as a group) are better than that of defined by the researchers. Therefore, we suggest that for purchasing decisions related to nature-based recreational goods such as WWR, the SQ should be determined by the respondents rather than by the researchers.

Keywords

Choice experiments (CEs); status quo (SQ); white water rafting (WWR); willingness to pay (WTP)

Author’s Acknowledgement

This research was funded by the Malaysian Ministry of Higher Education under University Research Grant Scheme (s/o : 12555)

http://dx.doi.org/10.17576/JEM-2018-5203-9
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Hasan-Basri, , Rawi, , & Omar, (2018). Does Status Quo Interpretation Affect Welfare Estimates?. Jurnal Ekonomi Malaysia, 52(3), 115–128. http://dx.doi.org/10.17576/JEM-2018-5203-9

@article{hassanbasri2018status,
  title={Does Status Quo Interpretation Affect Welfare Estimates?},
  author={Hasan-Basri, Bakti and Rawi, Shamsul Bahrain and Omar, Hamimi},
  journal={Jurnal Ekonomi Malaysia},
  volume={52},
  number={3},
  pages={115—128},
 

year={2018},
}

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