When I was a graduate student, I fell in love with choice models. After
years studying the econometrics of the standard linear model, discrete
choice offered so many new, cool twists. With contingent valuation (CV)
studies abounding, data was plentiful and varied. Every CV dataset had
its own kinks and quirks that begged to be addressed through innovative
modeling techniques. Dissertation topics were not scarce. We economists
like to assume. There are jokes written about this. My assumption, as I
slaved over the statistical properties of the double-bounded CV model,
was that CV data was good data, representing valid economic choices made
by survey respondents. Before I received my Ph.D., this assumption was
called into question big time. In 1989, the Exxon-Valdez oil tanker
spilled 11 million gallons of oil into Prince William Sound, Alaska. The
accident killed a lot of birds, devastated fisheries, harmed area
economies and ruined a reputation or two. It also changed the field of
environmental valuation. What was once a research field dominated by
environmental economists interested in obtaining nonmarket values for
environmental amenities was now a legal battleground pitting
environmental economists against "traditional" economists who were
skeptical of the techniques and procedures used with CV. If Nobel prizes
are indicators of quality - and I'm fairly certain they are - the
Exxon-Valdez oil spill drew the best and the brightest to scrutinize our
field.
