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Recovering Individual Preferences for Non-Market Goods: A Collective Travel-Cost Model

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  • Martina Menon
  • Federico Perali
  • Marcella Veronesi

Abstract

Traditional recreation demand models do not make a distinction between a household and an individual as the reference decision-making unit, thus assuming that a family maximizes a single utility function, even if the family consists of different individuals. Such models ignore the possibility of family members' divergent preferences for non-market goods. This study proposes a novel approach-the collective travel-cost model (CTCM)-to eliciting individual preferences for a non-market good, such as a recreation site, by using revealed preference data. This approach accounts for the intra-household resource allocation and the role of each household member's preferences. We show that the collective travel-cost model can be applied to estimating a recreation demand model that yields individual welfare estimates appropriate for policy analysis of non-market goods, such as the willingness to pay to access a recreation site. We find that how resources are distributed within the household reflects significant differences in welfare measures.

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  • Martina Menon & Federico Perali & Marcella Veronesi, 2014. "Recovering Individual Preferences for Non-Market Goods: A Collective Travel-Cost Model," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 96(2), pages 438-457.
  • Handle: RePEc:oup:ajagec:v:96:y:2014:i:2:p:438-457.
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    Cited by:

    1. Chavas, Jean-Paul & Menon, Martina & Pagani, Elisa & Perali, Federico, 2018. "Collective household welfare and intra-household inequality," Theoretical Economics, Econometric Society, vol. 13(2), May.
    2. repec:kap:reveho:v:16:y:2018:i:1:d:10.1007_s11150-017-9384-y is not listed on IDEAS
    3. Hansen, LeRoy & Hellerstein, Daniel & Ribaudo, Marc & Williamson, James & Nulph, David & Loesch, Charles & Crumpton, William, 2015. "Targeting Investments To Cost Effectively Restore and Protect Wetland Ecosystems: Some Economic Insights," Economic Research Report 199283, United States Department of Agriculture, Economic Research Service.

    More about this item

    JEL classification:

    • D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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