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Decomposing the structural identification of non-market values

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  • Kuminoff, Nicolai V.

Abstract

This paper addresses the issue of transparency in structural modeling by investigating how the assumptions of a structural model contribute to its identification of non-market values. Assumptions about the form of the utility function, the depiction of preference heterogeneity, and the definition for the choice set are shown to jointly identify a partition of preference space which explains observed behavior. The borders of the partition reflect substitution patterns. The regions in the partition set-identify preferences. Assumptions about the distribution of preferences within each region point-identify partial equilibrium welfare measures. Together, these observations provide a framework for decomposing the structural identification of non-market values. The new framework allows analysts to explain how their modeling assumptions influence estimates for benefits and costs. This addresses federal guidelines for quantifying uncertainty in the modeling assumptions which enter benefit-cost analysis. The framework is demonstrated by decomposing estimates of the MWTP for air quality.

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  • Kuminoff, Nicolai V., 2009. "Decomposing the structural identification of non-market values," Journal of Environmental Economics and Management, Elsevier, vol. 57(2), pages 123-139, March.
    • Handle: RePEc:eee:jeeman:v:57:y:2009:i:2:p:123-139
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    4. H. Allen Klaiber & V. Kerry Smith, 2010. "Valuing Incremental Highway Capacity in a Network," NBER Working Papers 15989, National Bureau of Economic Research, Inc.
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    6. Zhang, Congwen & Boyle, Kevin J. & Kuminoff, Nicolai V., 2015. "Partial identification of amenity demand functions," Journal of Environmental Economics and Management, Elsevier, vol. 71(C), pages 180-197.
    7. Patrick J. Walsh & J. Walter Milon & David O. Scrogin, 2011. "The Spatial Extent of Water Quality Benefits in Urban Housing Markets," Land Economics, University of Wisconsin Press, vol. 87(4), pages 628-644.
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    10. Nicolai V. Kuminoff & V. Kerry Smith & Christopher Timmins, 2013. "The New Economics of Equilibrium Sorting and Policy Evaluation Using Housing Markets," Journal of Economic Literature, American Economic Association, vol. 51(4), pages 1007-1062, December.
    11. Sandra Rousseau & Marieke Franck & Simon De Jaeger, 2020. "The Impact of Spatial Patterns in Road Traffic Externalities on Willingness-to-Pay Estimates," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 75(2), pages 271-295, February.
    12. Nicolai V. Kuminoff & V. Kerry Smith & Christopher Timmins, 2010. "The New Economics of Equilibrium Sorting and its Transformational Role for Policy Evaluation," NBER Working Papers 16349, National Bureau of Economic Research, Inc.
    13. Ratzke, Leonie, 2023. "Revealing preferences for urban biodiversity as an environmental good," Ecological Economics, Elsevier, vol. 212(C).
    14. Masha Maslianskaia-Pautrel, 2013. "Hedonic Model with Discrete Consumer Heterogeneity and Horizontal Differentiated Housing," CEEES Paper Series CE3S-03/13, European University at St. Petersburg, Department of Economics.
    15. Binner, Amy & Day, Brett, 2015. "Exploring mortgage interest deduction reforms: An equilibrium sorting model with endogenous tenure choice," Journal of Public Economics, Elsevier, vol. 122(C), pages 40-54.
    16. Allen Klaiber, H. & Phaneuf, Daniel J., 2010. "Valuing open space in a residential sorting model of the Twin Cities," Journal of Environmental Economics and Management, Elsevier, vol. 60(2), pages 57-77, September.
    17. Mikołaj Czajkowski & Anna Bartczak & Marek Giergiczny & Stale Navrud & Tomasz Żylicz, 2013. "Providing Preference-Based Support for Forest Ecosystem Service Management in Poland," Working Papers 2013-05, Faculty of Economic Sciences, University of Warsaw.
    18. Wiktor L. Adamowicz & Klaus Glenk & Jürgen Meyerhoff, 2014. "Choice modelling research in environmental and resource economics," Chapters, in: Stephane Hess & Andrew Daly (ed.), Handbook of Choice Modelling, chapter 27, pages 661-674, Edward Elgar Publishing.
    19. Marc Baudry & Masha Maslianskaia-Pautrel, 2012. "Revisiting the hedonic price method to assess the implicit price of environmental quality with market segmentation," EconomiX Working Papers 2012-45, University of Paris Nanterre, EconomiX.
    20. Fernandez, Linda & Cutter, Bowman & Sharma, Ritu & Scott, Tom, 2018. "Land preservation policy effect or neighborhood dynamics: A repeat sales hedonic matching approach," Journal of Environmental Economics and Management, Elsevier, vol. 88(C), pages 311-326.
    21. Elena G. Irwin, 2010. "New Directions For Urban Economic Models Of Land Use Change: Incorporating Spatial Dynamics And Heterogeneity," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 65-91, February.
    22. Fan, Qin & Klaiber, H. Allen & Fisher-Vanden, Karen, 2012. "Climate Change Impacts on U.S. Migration and Household Location Choice," 2012 Annual Meeting, August 12-14, 2012, Seattle, Washington 124588, Agricultural and Applied Economics Association.
    23. Bakkensen, Laura A. & Ma, Lala, 2020. "Sorting over flood risk and implications for policy reform," Journal of Environmental Economics and Management, Elsevier, vol. 104(C).

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