Immersive Virtual Reality and Willingness to Pay
By: Meyer, Kevin
Meyer, Kevin, Immersive Virtual Reality and Willingness to Pay, Journal of Agricultural and Resource Economics, Volume 45, Issue 3, September 2020, Pages 484-495
This paper illustrates how to improve the immersiveness of an environmental valuation study using virtual reality (VR) headsets and real video footage. Recent research has used Òvirtual environmentsÓ to study this issue, but technological advances in VR headsets allow for a far greater degree of immersion. In this study, subjects were randomly shown either a VR video or static pictures of a polluted lake, before and after cleanup. They were then asked to indicate whether they would be willing to pay a random amount to improve lake water quality to the level shown. A discrete choice model is used to estimate and compare the willingness to pay for both groups. In this case study, there was no detectable effect on willingness to pay estimates. However, the technology may be beneficial for other valuation scenarios, particularly when the environmental change is complex or difficult for participants to evaluate.