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Nonparametric Bounds on Welfare with Measurement Error in Prices: Techniques for Non-Market Resource Valuation

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Author Info
Crooker, John R.

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Abstract

Nonparametric techniques are frequently applied in recreation demand studies when researchers are concerned that parametric utility specifications impart bias upon welfare estimates. A goal of this paper is to extend previous work on nonparametric bounds for welfare measures to allow for measurement errors in travel costs. Haab and McConnell (2002) state that issues in travel time valuation continue to be topical in the recreational demand literature. This paper introduces a bootstrap augmented nonparametric procedure to precisely bound welfare when price data contains measurement error. The technique can be extended and becomes more convenient relative to other approaches when more than two site visits are made by a single recreationist. These techniques are demonstrated in a Monte Carlo experiment.

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Publisher Info
Article provided by Northeastern Agricultural and Resource Economics Association in its journal Agricultural and Resource Economics Review.

Volume (Year): 36 (2007)
Issue (Month): 2 (October)
Pages:
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Handle: RePEc:ags:arerjl:44700

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Related research
Keywords: nonparametrics; welfare estimation; bootstrap; recreation demand; nonmarket valuation; Resource /Energy Economics and Policy;

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  1. Varian, Hal R, 1982. "The Nonparametric Approach to Demand Analysis," Econometrica, Econometric Society, vol. 50(4), pages 945-73, July. [Downloadable!] (restricted)
  2. Englin Jeffrey & Shonkwiler J. S., 1995. "Modeling Recreation Demand in the Presence of Unobservable Travel Costs: Toward a Travel Price Model," Journal of Environmental Economics and Management, Elsevier, vol. 29(3), pages 368-377, November. [Downloadable!] (restricted)
  3. Burt, Oscar R & Brewer, Durward, 1971. "Estimation of Net Social Benefits from Outdoor Recreation," Econometrica, Econometric Society, vol. 39(5), pages 813-27, September. [Downloadable!] (restricted)
  4. Kling, Catherine L., 1989. "The Importance Of Functional Form In The Estimation Of Welfare," Western Journal of Agricultural Economics, Western Agricultural Economics Association, vol. 14(01), July. [Downloadable!]
  5. Crooker, John & Kling, Catherine L., 2000. "Nonparametric Bounds on Welfare Measures: A New Tool for Nonmarket Valuation," Journal of Environmental Economics and Management, Elsevier, vol. 39(2), pages 145-161, March. [Downloadable!] (restricted)
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  6. John R. McKean & Donn M. Johnson & Richard G. Walsh, 1995. "Valuing Time in Travel Cost Demand Analysis: An Empirical Investigation," Land Economics, University of Wisconsin Press, vol. 71(1), pages 96-105. [Downloadable!] (restricted)
  7. Danielle Hagerty & Klaus Moeltner, 2005. "Specification of Driving Costs in Models of Recreation Demand," Land Economics, University of Wisconsin Press, vol. 81(1). [Downloadable!] (restricted)
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