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Divergence in alternative Hicksian welfare measures: the case of revealed preference for public amenities

  • Sudip Chattopadhyay

    (Department of Economics, San Francisco State University, 1600 Holloway Avenue, San Francisco, CA 94132, USA)

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    This paper investigates the divergence between the two Hicksian welfare measures of non-traded amenity improvement associated with housing. First, the Hicksian surplus measures for amenity changes are analytically developed based on explicit specification of utility structures. A hedonic two-stage approach is then applied to empirically show that, for quantity changes, in contrast to hypothetical markets, divergence in real market is small. The paper also analytically develops expressions for the income and substitution effects and empirically shows that for a given income effect, the greater the substitution effect the smaller the divergence between the two measures. Copyright © 2002 John Wiley & Sons, Ltd.

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    File URL: http://hdl.handle.net/10.1002/jae.635
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    File URL: http://qed.econ.queensu.ca:80/jae/2002-v17.6/
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    Article provided by John Wiley & Sons, Ltd. in its journal Journal of Applied Econometrics.

    Volume (Year): 17 (2002)
    Issue (Month): 6 ()
    Pages: 641-666

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    Handle: RePEc:jae:japmet:v:17:y:2002:i:6:p:641-666
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    17. Coursey, Don L & Hovis, John L & Schulze, William D, 1987. "The Disparity between Willingness to Accept and Willingness to Pay Measures of Value," The Quarterly Journal of Economics, MIT Press, vol. 102(3), pages 679-90, August.
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