Imagine If

Imagine you were taking a survey. That survey offers some hypothetical scenario, and asks you what you would do. You may say you are going to buy a new product, or vote for a new party. If that hypothetical scenario becomes real: do your actual reactions match your survey response?

This article looks at hypothetical bias in survey research.

What is hypothetical bias?

In environmental economics, it is important to understand people’s willingness to pay — how much people value their environment. Similarly, in competition analysis, we need to understand how people will respond to price changes or new entrants.

“Contingent valuation” is to ask people directly what they would be willing to pay or willing to give up. Choice modelling is another family of techniques: for instance, options may be ranked, or respondents are offered a fixed set of alternatives.

Hypothetical bias arises when the value people say in the survey’s hypothetical scenario exceeds what they are actually willing to pay in laboratory or field experiments. As environmental economist John Loomis writes:

Although this bias is not found in all stated preference surveys, hypothetical [willingness to pay] typically exceeds the actual value by a factor of two to three.

It is easy to say you will pay £500 in a survey — it is less easy hand £500 over. There is a difference between saying and doing.