Benefit cost analysis components of the Global Impact Study

Benefit cost analysis components of the Global Impact Study

One of the research questions the Global Impact Study is considering is the relationship between the costs and benefits of providing and using public access to information and communication technologies (ICTs). Understanding this relationship is important for governmental and non-governmental decision makers who fund or are thinking about funding public access ICT venues. There is a multitude of approaches in the cost-benefit analysis field for examining this issue, as well as a multitude of perspectives from which it could be studied. The Global Impact Study is employing three different methods to estimate the use and non-use benefits of providing public access to ICTs and examine how these are distributed by geographic and demographic characteristics.

Tyler Davis, PI for the Benefit Cost Analysis in-depth study, describes the three methods:

1. Travel Cost Survey: The travel cost method of conducting benefit cost analysis is a measure of “use value.” Use value is the value that individuals who use a resource place upon that resource. For resources that are not traded in the open market the use value is difficult to estimate because there is no observable price that individuals pay to access the good (for example, the price of access to the internet at a public library). In these cases the researcher must use non-market valuation methods. The travel cost method is a means to estimate the minimum value an individual places on a good or service by observing their travel time and travel cost expended to reach the resource. By estimating the opportunity cost of their time spend in travel to the resource and the transportation costs incurred, we identify the minimum value the individual places on access to the ICT resource. The travel cost method is being implemented in five countries (Bangladesh, Brazil, Chile, Ghana and the Philippines) through questions in the Global Impact Study’s user survey.
2. Contingent Valuation Survey: For the Benefit Cost Analysis in-depth study in Chile, we are using a contingent valuation (dichotomous choice) survey that relies upon stated preference. We are not measuring a market good so we again rely on non-market valuation methods. For the contingent valuation study we are conducting a random sample of individuals and presenting them with a hypothetical referendum to prevent the reduction of hours of service of a public access ICT venue. The respondent is asked to consider the value they place on the public access venue even if they do not use it themselves. The contingent valuation method captures use value from people who use public access venues, and non-use values by identifying non-users’ willingness to pay for the public to have access to ICT venues. The non-use value is almost always higher than the use value for public goods, as the number of non-users is usually greater than the number of users. This study will complement the travel cost data from the user survey in Chile to present a more complete picture of the value of public access to ICT by presenting both a high and low value of public access ICT benefits. The contingent valuation survey is being implemented in Chile through one of the Global Impact Study’s in-depth studies.
3. Stated Preference Survey: The third study relies upon a survey where individuals are asked to state their willingness to pay to prevent public access ICT venues from closing. This method has greater error than the contingent valuation method, but uses dissonance minimization methods to diminish these sources of error. Methods to reduce error include allowing individuals to share their preferences for payment vehicles, and acknowledging that some services should be provided to everyone. The non-user survey captures only non-use value by definition. We expect the stated willingness to pay to prevent closure of public access venues will result in a higher valuation than the travel cost method because it includes non-use values, which are usually higher than use values. In conjunction with the travel cost study, we will present a range of values for each of the five countries in the Global Impact Study’s non-user survey.

Pursuing three types of benefit cost analysis will allow us to present both use and non-use values for access to information and communication technology, and to show how the values differ across geographic and demographic characteristics. Together these three methods provide a more nuanced view of how individuals value access to ICT, and how that value differs by venue. This nuanced view will inform ICT providers by identifying locations and individuals who place the greatest value on access to ICT and suggest increased efficiencies in choosing between types of venues and locations for siting new venues.

We will share findings as they emerge from the benefit cost analysis components of the Global Impact Study using the costs & benefits tag. As always, we welcome your comments and questions below.