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Heterogeneity in Environmental Demand

Author

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  • Daniel J. Phaneuf

    () (Department of Agricultural and Applied Economics, University of Wisconsin, Madison, Wisconsin 53706)

Abstract

Heterogeneity is a defining characteristic of environmental demand studies that use household-level data. People make different choices due to observed and unobserved differences in preferences and constraints, choice elements are quality-differentiated commodities that can be consumed in different ways, and observed characteristics of people are often import for policy. In this review I examine how environmental economists have responded to the challenges and opportunities this heterogeneity implies. I categorize the types of heterogeneity that can be present, provide examples of each, and propose criteria to use in deciding when explicit attention should be paid to the different types. I then show how a variety of economic and econometric models have been used to accommodate the various dimensions of observed and unobserved heterogeneity, and I discuss opportunities for further research on the topic.

Suggested Citation

  • Daniel J. Phaneuf, 2013. "Heterogeneity in Environmental Demand," Annual Review of Resource Economics, Annual Reviews, vol. 5(1), pages 227-244, June.
  • Handle: RePEc:anr:reseco:v:5:y:2013:p:227-244
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    File URL: http://www.annualreviews.org/doi/abs/10.1146/annurev-resource-091912-151841
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    Cited by:

    1. Wendong Zhang & Brent Sohngen, 2018. "Do US Anglers Care about Harmful Algal Blooms? A discrete choice experiment of Lake Erie recreational anglers," Center for Agricultural and Rural Development (CARD) Publications 17-wp573, Center for Agricultural and Rural Development (CARD) at Iowa State University.

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