Exploring the Gap Between Measured and Perceived Quality

Even when information is made available through public campaigns, people may still retain inaccurate perceptions of environmental quality. We look at coastal water quality in Southern California via a telephone survey. Fewer than half of respondents are able to correctly rank two randomly chosen beaches in terms of water quality. A logit analysis of the rankings reveals that there are systematic factors underlying the accuracy of people’s perceptions. It is also shown that failure to fully account for omitted variables in revealed preference valuation models may lead to false findings of statistical relationships between measured environmental quality and consumer choice.