Using virtual reality to improve discrete choice experiments

Following on from my post earlier this month about eye-tracking in discrete choice experiments, I recently read this new article by Ilias Mokas (Hasselt University) and co-authors, published in the Journal of Environmental Economics and Management (open access). They look at the impact of using virtual reality in a discrete choice experiment. To see why, let's first take a step back.

Discrete choice experiments involve giving research participants a series of choices over hypothetical 'goods'. Essentially, research participants are asked how much they are willing to pay for the hypothetical good. It might be an environmental good (clearer air; clearer water; reforestation, etc.). Or it might be road safety improvements, or a hypothetical vaccine. The key is that there is no market for the good now, so it is difficult to value. But knowing how people value the good is important for decision-making, such as how to allocate scarce public resources.

The problem with a discrete choice experiment is that the good is hypothetical. A 'standard' discrete choice experiment simply describes the options in words. Research participants can't see the options they are asking to choose between. It is therefore difficult for them to evaluate how much they are willing to pay for each option, and than manifests in uncertainty for the research participants, and ultimately in a large component of randomness to the estimated willingness-to-pay (WTP) in discrete choice experiments.

In the Mokas et al. paper, the choices were about the amount and style of 'green infrastructure', essentially how many and how big the trees are along the side of the street. That is a context where a textual description isn't really going to do it justice. You could show the research participants some pictures of a rendered hypothetical streetscape, or a fly-through video. At least those options would ensure that research participants are valuing the same thing, rather than what might be very different interpretations of the textual description. However, Mokas et al. take this a step further and reason that a virtual reality (VR) streetscape would be even better, because it enables the research participants to interact with the environment, moving around, looking at what interests them most, etc. Here's what the set-up looks like (from Figure 1 of the article):

Mokas et al. test the effect of VR with 180 Belgian research participants, and a streetscape that is representative of the Flanders region. Comparing three treatments (text, a fly-through video, and VR), they find that:

...the choice set representation with an immersive VR environment reduced the respondents’ uncertainty, and thus, improved the evaluability for the urban green options compared to a representation with video on a computer screen... A potential explanation for this observation is that while in the text version, the participants have to construct the scenarios in their mind, a representation with video or VR enhances familiarity with the attributes in the choice sets because of the additional visual information provided, which allows to process and evaluate the information more systemically.

In other words, the randomness in the estimated WTP (part of which arises from the research participants' uncertainty) is reduced by using VR. That leads to 'better' (in the sense of being more precisely estimated) measures of willingness-to-pay. It would also hopefully lead to better decision-making from policy-makers presented with an analysis of how much taxpayers are willing to pay for green infrastructure. There are a lot of similar contexts where using VR would improve the resulting WTP estimates. This is an exciting improvement over the underlying 'standard' approach.