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Using Happiness Surveys to Value Intangibles: The Case of Airport Noise

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Author Info
Bernard M.S. van Praag ()
Barbara E. Baarsma ()

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Abstract

Inhabitants of houses near Amsterdam Airport are complaining of noise nuisance, caused by aircraft traffic. The usual assumption is that the effect of the externality will be perfectly reflected by house price differentials. This is based on the implicit assumption that there is a well-functioning housing market. If that is not true, we need a correction method in order to assess the intangible damage. We assess the monetary value of the noise damage, caused by aircraft noise nuisance around Amsterdam Airport as the sum of hedonic price differentials and a residual cost component. The residual costs are assessed from a survey, including an ordinal life satisfaction scale, on which individual respondents have scored. The derived compensation scheme depends on, among other things, the objective noise level, income, the degree to which prices account for noise differences, and the presence of noise insulation.

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Publisher Info
Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number CESifo Working Paper No. 1163.

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Date of creation: 2004
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Handle: RePEc:ces:ceswps:_1163

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Related research
Keywords: cost-benefit analysis; externalities; airport noise; satisfaction analysis; residual shadow costs;

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Find related papers by JEL classification:
C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models
D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
D62 - Microeconomics - - Welfare Economics - - - Externalities
H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

References listed on IDEAS
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  1. Pearce, David, 1992. "Economic valuation and the natural world," Policy Research Working Paper Series 988, The World Bank. [Downloadable!]
  2. Oswald, Andrew, 1997. "Happiness and Economic Performance," The Warwick Economics Research Paper Series (TWERPS) 478, University of Warwick, Department of Economics. [Downloadable!]
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  3. Bernard M.S. van Praag & Paul Frijters, 1999. "The measurement of welfare and well-being; the Leyden approach," Paul Frijters Discussion Papers 1999, School of Economics and Finance, Queensland University of Technology. [Downloadable!]
  4. Blanchflower, David G. & Oswald, Andrew J., 2004. "Well-being over time in Britain and the USA," Journal of Public Economics, Elsevier, vol. 88(7-8), pages 1359-1386, July. [Downloadable!] (restricted)
    Other versions:
  5. Richard Carson & Nicholas Flores & Norman Meade, 2001. "Contingent Valuation: Controversies and Evidence," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 19(2), pages 173-210, June. [Downloadable!] (restricted)
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  6. Van Praag, Bernard, 1971. "The welfare function of income in Belgium: An empirical investigation," European Economic Review, Elsevier, vol. 2(3), pages 337-369. [Downloadable!] (restricted)
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  7. Easterlin, Richard A, 2001. "Income and Happiness: Towards an Unified Theory," Economic Journal, Royal Economic Society, vol. 111(473), pages 465-84, July. [Downloadable!] (restricted)
  8. Plug, Erik J. S. & van Praag, Bernard M. S. & Hartog, Joop, 1999. "If we knew ability, how would we tax individuals?," Journal of Public Economics, Elsevier, vol. 72(2), pages 183-211, May. [Downloadable!] (restricted)
  9. Terza, Joseph V., 1987. "Estimating linear models with ordinal qualitative regressors," Journal of Econometrics, Elsevier, vol. 34(3), pages 275-291, March. [Downloadable!] (restricted)
  10. Menno Pradhan & Martin Ravallion, 2000. "Measuring Poverty Using Qualitative Perceptions Of Consumption Adequacy," The Review of Economics and Statistics, MIT Press, vol. 82(3), pages 462-471, August. [Downloadable!] (restricted)
  11. Blomquist, Glenn C & Berger, Mark C & Hoehn, John P, 1988. "New Estimates of Quality of Life in Urban Areas," American Economic Review, American Economic Association, vol. 78(1), pages 89-107, March. [Downloadable!] (restricted)
  12. Frey, Bruno S. & Stutzer, Alois, 2000. "Happiness, Economy and Institutions," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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  13. B.M.S. van Praag & B.E. Baarsma, 2001. "The Shadow Price of Aircraft Noise Nuisance," Tinbergen Institute Discussion Papers 01-010/3, Tinbergen Institute. [Downloadable!]
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  14. Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, vol. 104(424), pages 648-59, May. [Downloadable!] (restricted)
  15. Ada Ferrer-i-Carbonell & Bernard M.S. van Praag, 2002. "The subjective costs of health losses due to chronic diseases. An alternative model for monetary appraisal," Health Economics, John Wiley & Sons, Ltd., vol. 11(8), pages 709-722. [Downloadable!]
    Other versions:
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This page was last updated on 2009-11-3.

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