A General Method for Valuing Non-Market Goods Using Wellbeing Data: Three-Stage Wellbeing Valuation
AbstractSubjective wellbeing data is becoming increasingly popular in economics research. The wellbeing valuation approach uses wellbeing data instead of data gleaned from preferences to attach monetary values to non-market goods. This method could be an important alternative to preference-based valuation methods such as contingent valuation, but there are a number of significant technical deficiencies with the current methodology. It is argued that the current method derives biased estimates of the value of non-market goods. The paper presents Three-Stage Wellbeing Valuation, a new approach to valuation using subjective wellbeing data that solves for the main technical problems and as a result derives estimates of welfare change and value that are consistent with welfare economic theory. As an example, I derive robust values associated with unemployment using the new approach and compare these to biased values derived from the standard wellbeing valuation method. Values derived from Three-Stage Wellbeing Valuation can be used in cost-benefit analysis.
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Bibliographic InfoPaper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp1233.
Date of creation: Jul 2013
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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP
subjective wellbeing; non-market valuation; cost-benefit analysis; unemployment; causal inference;
Find related papers by JEL classification:
- C39 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Other
- D6 - Microeconomics - - Welfare Economics
- D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
- I31 - Health, Education, and Welfare - - Welfare and Poverty - - - General Welfare
- J68 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Public Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-08-05 (All new papers)
- NEP-HAP-2013-08-05 (Economics of Happiness)
- NEP-HPE-2013-08-05 (History & Philosophy of Economics)
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