Willingness to accept versus willingness to pay in a discrete choice experiment

Abstract

Objectives: Our main objective was to compare willingness to accept (WTA) and willingness to pay (WTP) in a discrete choice experiment on hearing aid provision. Additionally, income effect and endowment effect were explored as possible explanations for the disparity between WTA and WTP, and the impact of using a WTA and/or WTP format to elicit monetary valuations on the net benefit of the new organization of hearing aid provision was examined.

Methods: Choice sets were based on five attributes: performer of the initial assessment; accuracy of the initial assessment; duration of the pathway; follow-up at the ear, nose, and throat specialist; and costs. Persons with hearing complaints randomly received a WTP (costs defined as extra payment) or WTA (costs defined as discount) version of the experiment. In the versions, except for the cost attribute, all choice sets were equal.

Results: The cost coefficient was statistically significantly higher in the WTP format. Marginal WTA was statistically significantly higher than marginal WTP for the attributes accuracy and follow-up. Disparity was higher in the high educational (as proxy for income) group. We did not find proof of an experience endowment effect. Implementing the new intervention would only be recommended when using WTP.

Conclusions: WTA exceeds WTP, also in a discrete choice experiment. As this affects monetary valuations, more research on when to use a payment or a discount in the cost attribute is needed before discrete choice results can be used in cost-benefit analyses.