Policy makers, regulators, public utilities and businesses often want to understand people’s preferences or willingness to pay with respect to planned interventions or hypothetical scenarios.  In many instances, there are insufficient data on real market choices to address this need, and so decision makers often turn to the academically well-established techniques of stated preference research to provide the evidence.  Stated preference studies pose a series of specially crafted choices to respondents, and then analyse the response data using econometric techniques.  The core results include statistical estimates of the key measures of interest to the decision maker, such as customers’ willingness to pay for changes in service levels, the public’s willingness to pay for a programme of environmental improvements, or the elasticities of demand with respect to price or income changes.  The techniques of stated preference research can be applied across a wide range of cases to obtain precisely designed measures targeted at the real issues at stake. For example:

  • a policy maker may wish to evaluate the impact of a proposed consumption tax scheme at different rates and thresholds to inform the policy design;
  • a regulator may need an estimate of the benefits of a new regulation for an impact assessment;
  • a regulated utility may need estimates of customers’ willingness to pay for improved services to justify its investment proposals to a regulator;
  • a business may wish to know the level of demand for its services in various scenarios.

PJM economics works with partner organisations to deliver high quality stated preference research, from design through to final reporting and application in cost-benefit analysis.  We also advise on best practice approaches to stated preference research, and offer peer review of other organisations’ studies.

Related experience

(Includes experience gained while in previous employment at organisations other than PJM Economics)

  • Stated Preference / Willingness to Pay Research for PR14/SR14 Business Planning in the UK Water Sector
    Scottish Water, Northumbrian Water, Welsh Water, South West Water, Southern Water, South East Water, Sutton & East Surrey Water, UK.
  • Carrying out Willingness to Pay Surveys – Industry Best Practice Guidelines
    UK Water Industry Research, UK.
  • Peer Review of Stated Preference Survey for Payment Protection Insurance Inquiry.
    Competition Commission, UK.
  • The Social Value of the Post Office
    Postcomm, UK
  • Appraisal of an Infrastructure Investment Proposal for rural Uganda
    Infraco, Uganda.
  • Stated Preference / Willingness to Pay Research for PR09 Business Planning in the UK Water Sector
    Thames Water, Anglian Water, South West Water, UK.
  • Public Preferences for Water Framework Directive Outcomes [Prioritisation]
  • Valuing the Benefits of the Water Framework Directive to England and Wales
    DEFRA / CRP, UK.
  • Stated Preference Analysis of Consumer Preferences for Drug Attributes
    Pfizer, International.
  • The Economic and Social Cost of Water Use Restrictions
    Thames Water, UK.