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Microeconometric Strategies for Dealing with Unobservables and Endogenous Variables in Recreation Demand Models


  • Klaus Moeltner

    () (Department of Agricultural and Applied Economics, Virginia Tech, Blacksburg, Virginia 24061)

  • Roger von Haefen

    () (Department of Agricultural and Resource Economics, North Carolina State University, Raleigh, North Carolina 27695
    National Bureau of Economic Research, Cambridge, Massachusetts 02138)


The past decade has witnessed significant advances in the microeconometric analysis of recreation data. In this review, we focus on two areas in which these innovations have been especially prolific: accounting for unobserved preference heterogeneity and controlling for unobserved and possibly endogenous site characteristics, such as congestion. Failure to appropriately address these issues with the nonlinear models typically used in recreation demand analysis can severely bias parameter and welfare estimates. We consider these issues of widespread importance within and beyond recreation demand applications. We also expect these estimation challenges to become more ubiquitous as the field gradually moves toward region-wide, multisite applications in reaction to large-scale environmental changes.

Suggested Citation

  • Klaus Moeltner & Roger von Haefen, 2011. "Microeconometric Strategies for Dealing with Unobservables and Endogenous Variables in Recreation Demand Models," Annual Review of Resource Economics, Annual Reviews, vol. 3(1), pages 375-396, October.
  • Handle: RePEc:anr:reseco:v:3:y:2011:p:375-396

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    Cited by:

    1. Richard T. Melstrom & Deshamithra H. W. Jayasekera, 2017. "Two-Stage Estimation to Control for Unobservables in a Recreation Demand Model with Unvisited Sites," Land Economics, University of Wisconsin Press, vol. 93(2), pages 328-341.
    2. David A. Keiser & Joseph S. Shapiro, 2017. "Consequences of the Clean Water Act and the Demand for Water Quality," NBER Working Papers 23070, National Bureau of Economic Research, Inc.
    3. Melstrom, Richard & Lupi, Frank, 2012. "Using a Control Function to Resolve the Travel Cost Endogeneity Problem in Recreation Demand Models," MPRA Paper 48036, University Library of Munich, Germany, revised May 2013.
    4. Joseph S. Shapiro & David A. Keiser, 2017. "Consequences of the Clean Water Act and the Demand for Water Quality," Cowles Foundation Discussion Papers 2070, Cowles Foundation for Research in Economics, Yale University.
    5. David A. Keiser & Joseph S. Shapiro, 2017. "Consequences of the Clean Water Act and the Demand for Water Quality," Working Papers 17-07, Center for Economic Studies, U.S. Census Bureau.
    6. Wiktor L. Adamowicz & Klaus Glenk & J├╝rgen Meyerhoff, 2014. "Choice modelling research in environmental and resource economics," Chapters,in: Handbook of Choice Modelling, chapter 27, pages 661-674 Edward Elgar Publishing.

    More about this item


    preference heterogeneity; random effects; latent class models; endogenous sorting; Bayesian methods; expectation-maximum algorithm;

    JEL classification:

    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects


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