Abstract

On the construct validity of measures of willingness to pay for green electricity: Evidence from a South African case

Kai-Ying A. Chan^a,*, Leon A.G. Oerlemans^a,b and Jako Volschenk^c

^a Department of Engineering and Technology Management, Graduate School of Technology Management, University of Pretoria, Lynnwood Road, Pretoria 0002, RSA.

^b Department of Organisation Studies and Center for Innovation Research, Tilburg University, 2 Warandelaan, 5037 AB Tilburg,  The Netherlands.

^c University of Stellenbosch Business School, Carl Cronjé Drive, Bellville, Cape Town 7530, RSA.

The price consumers are willing to pay (WTP) extra for green electricity (GE) is one of the uncertainties possibly impacting on the overall feasibility of its market introduction. In the literature, several measurements of WTP are used. However, the number of studies comparing WTP measures is limited. This study investigates the construct validity (convergent and theoretical) of two widely used WTP measures (double-bounded dichotomous choice (DC) and open-ended (OE)). A model informed by the well-known theory of planned behaviour was applied to survey data from 890 South African domestic energy users. It was found that convergent validity among the WTP measures was fairly low. Moreover, results from Tobit regressions showed that a grounded theoretical model yields statistically significant results. However, different independent variables emerge in the DC and OE models. Therefore, the theoretical validity of one of the WTP measures seems to be low. The paper proposes a number of explanations for the low construct validity observed.

Keywords: Green electricity, willingness to pay, construct validity, South Africa

* Corresponding author: Department of Engineering and Technology Management, Graduate School of Technology Management, University of Pretoria, Hatfield, Pretoria 0002, South Africa. Tel: +27 12 420 5070. Fax: +27 12 362 5307. Email address: [email protected].