Choice Experiments: identifying preferences or production functions?

This report presents an alternative perspective on how respondents consider choice experiment options. Building on the ‘new’ model of consumer demand by Stigler and Becker (1977), the report suggests that the attributes within choice experiments are not valued directly. Rather, they are used to generate higher-level improvement in the environment (‘constructs’). This implies that to achieve the environmental outcome, what are currently viewed as marginal utilities of attributes are in fact marginal utilities mixed with (subjective) marginal productivity of the attribute. The research report also proposes that hierarchical Information integration methods may allow separate identification of the utility and production functions, and the individual heterogeneity therein.