Does Better Information About the Good Avoid the Embedding Effect?

In contingent valuation, embedding refers to the solicitation of willingness to pay for a good that is valued as a component of a larger good. This study addressed one of the criticisms of previous embedding studies, that the good was inadequately described to respondents. We tested for the effect of embedding on willingness to pay for natural area protection under three information levels, and found that amount of information had little impact on the effect of embedding on willingness to pay—under all three information conditions, embedding significantly lowered willingness to pay. If this and other embedding studies can be interpreted as indicating that many people consider related public goods to be close substitutes, then embedding studies demonstrate the considerable sensitivity of respondents to information about substitutes. Successful use of contingent valuation to value public goods relies on agreement about how to present information about substitutes.