The scope sensitivity test is used to validate value estimates of non-market environmental goods and services derived from the contingent valuation method. The absence
of economic scope points to the invalid value estimates. Recent studies have attributed
scope insensitivity to affective, cognitive, and behavioral factors. In this study, we extend the behavioral insights in explaining scope insensitivity by incorporating insights
from the theory of mental accounting. Our empirical results indicate that if subjects
consider the environmental good as part of their recreational budget within a mental
accounting framework, we can explain the scope insensitivity with otherwise standard
preference.
