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Evaluation of Nonmarket Goods: Recovering Unconditional Preferences

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  • Udo Ebert

Abstract

A new approach is proposed for the evaluation of nonmarket goods, starting from a complete or incomplete (conditional) demand system for market goods which is observable and depends on nonmarket goods. This information is not sufficient to recover the underlying preference ordering of the representative consumer. The central idea is to employ additional marginal willingness to pay functions for the nonmarket goods. Since they can be estimated either together with the demand system or in a separate step they are less arbitrary than the assumptions or hypotheses usually made. If the entire system is (weakly) integrable the underlying ordering and appropriate welfare measures can be derived. In this article I investigate the relationship between conditional and unconditional demand systems, present sufficient conditions for (weak) integrability, and demonstrate the practicability of the procedure proposed by means of three examples. Copyright 1998, Oxford University Press.

Suggested Citation

  • Udo Ebert, 1998. "Evaluation of Nonmarket Goods: Recovering Unconditional Preferences," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 80(2), pages 241-254.
  • Handle: RePEc:oup:ajagec:v:80:y:1998:i:2:p:241-254
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    File URL: http://hdl.handle.net/10.2307/1244497
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    Cited by:

    1. Udo Ebert, 2003. "Environmental Goods and the Distribution of Income," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 25(4), pages 435-459, August.
    2. Herriges, Joseph A. & Kling, Catherine L. & Phaneuf, Daniel J., 2004. "What's the use? welfare estimates from revealed preference models when weak complementarity does not hold," Journal of Environmental Economics and Management, Elsevier, vol. 47(1), pages 55-70, January.
    3. Richard Carson & Nicholas Flores & Norman Meade, 2001. "Contingent Valuation: Controversies and Evidence," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 19(2), pages 173-210, June.
    4. David G. Brown, 2008. "Falsifying the “Goodness” of Nonmarket Goods with Revealed Preference," Departmental Working Papers 2008-08, Department of Economics, Louisiana State University.
    5. Hertzler, Greg, 2008. "Dynamic Contingent Valuation and Choice Modelling for Ecosystem Services," 2008 Conference (52nd), February 5-8, 2008, Canberra, Australia 6024, Australian Agricultural and Resource Economics Society.
    6. David G. Brown, 2009. "A Revealed Preference Feasibility Condition for Weak Complementarity," Departmental Working Papers 2009-08, Department of Economics, Louisiana State University.
    7. Ebert, Udo, 2008. "Approximating WTP and WTA for environmental goods from marginal willingness to pay functions," Ecological Economics, Elsevier, vol. 66(2-3), pages 270-274, June.
    8. Ebert, Udo, 2007. "Revealed preference and household production," Journal of Environmental Economics and Management, Elsevier, vol. 53(2), pages 276-289, March.
    9. Martini, Chiara & Tiezzi, Silvia, 2014. "Is the environment a luxury? An empirical investigation using revealed preferences and household production," Resource and Energy Economics, Elsevier, vol. 37(C), pages 147-167.
    10. Cunha-e-Sa, Maria A. & Ducla-Soares, Maria M., 1999. "Specification Tests for Mixed Demand Systems with an Emphasis on Combining Contingent Valuation and Revealed Data," Journal of Environmental Economics and Management, Elsevier, vol. 38(2), pages 215-233, September.
    11. Smith, V. Kerry & Van Houtven, George & Pattanayak, Subhrendu, 1999. "Benefit Transfer as Preference Calibration," Discussion Papers dp-99-36, Resources For the Future.
    12. Eom, Young-Sook & Larson, Douglas M., 2006. "Improving environmental valuation estimates through consistent use of revealed and stated preference information," Journal of Environmental Economics and Management, Elsevier, vol. 52(1), pages 501-516, July.
    13. Palmquist, Raymond B., 2005. "Weak complementarity, path independence, and the intuition of the Willig condition," Journal of Environmental Economics and Management, Elsevier, vol. 49(1), pages 103-115, January.
    14. Ebert, Udo, 2001. "A general approach to the evaluation of nonmarket goods," Resource and Energy Economics, Elsevier, vol. 23(4), pages 373-388, October.
    15. V. Kerry Smith & George Van Houtven & Subhrendu K. Pattanayak, 2002. "Benefit Transfer via Preference Calibration: "Prudential Algebra" for Policy," Land Economics, University of Wisconsin Press, vol. 78(1), pages 132-152.
    16. Phaneuf, Daniel J. & Smith, V. Kerry, 2006. "Recreation Demand Models," Handbook of Environmental Economics,in: K. G. Mäler & J. R. Vincent (ed.), Handbook of Environmental Economics, edition 1, volume 2, chapter 15, pages 671-761 Elsevier.
    17. David G. Brown, 2008. "Preference-Theoretic Weak Complementarity: Getting More with Less," Departmental Working Papers 2008-09, Department of Economics, Louisiana State University.
    18. Smith, V. Kerry, 2000. "JEEM and Non-market Valuation: 1974-1998," Journal of Environmental Economics and Management, Elsevier, vol. 39(3), pages 351-374, May.
    19. Udo Ebert, 2010. "On the Measurement of Welfare for Market and Nonmarket Goods: A Numerical Approach," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 92(1), pages 102-109.
    20. John Loomis, 2009. "Nancy Bockstael and Kenneth McConnell, Environmental and Resource Valuation with Revealed Preferences: A Theoretical Guide to Empirical Models," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 42(1), pages 133-135, January.

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