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Decoupling the Value of Leisure Time from Labor Market Returns in Travel Cost Models

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  • Patrick Lloyd-Smith
  • Joshua K. Abbott
  • Wiktor Adamowicz
  • Daniel Willard

Abstract

Understanding the extent to which people substitute activities across time is important for evaluating behavior and welfare impacts in many contexts, including assessing the damages caused by oil spills and climate change impacts. We implement a flexible, individualized approach to measuring how people value their leisure time. We incorporate these heterogeneous values into a structural demand model that explicitly focuses on intertemporal substitution and incorporates time constraints on behavior. The model is estimated using data on recreation demand for for-hire offshore fishing trips in the US Gulf of Mexico. We find that respondents value their leisure time heterogeneously and substantially differently from their implied wage rate. We also find that accounting for this heterogeneity has significant impacts on estimated welfare measures for policies with large intertemporal substitution effects. These findings raise concerns with the common practice of solely relying on labor market information to value people's leisure time.

Suggested Citation

  • Patrick Lloyd-Smith & Joshua K. Abbott & Wiktor Adamowicz & Daniel Willard, 2019. "Decoupling the Value of Leisure Time from Labor Market Returns in Travel Cost Models," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 6(2), pages 215-242.
  • Handle: RePEc:ucp:jaerec:doi:10.1086/701760
    DOI: 10.1086/701760
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    Citations

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    Cited by:

    1. Joffre Swait & Cristiano Franceschinis & Mara Thiene, 2020. "Antecedent Volition and Spatial Effects: Can Multiple Goal Pursuit Mitigate Distance Decay?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 75(2), pages 243-270, February.
    2. Voltaire, Louinord & Koutchade, Obafèmi Philippe, 2020. "Public acceptance of and heterogeneity in behavioral beach trip responses to offshore wind farm development in Catalonia (Spain)," Resource and Energy Economics, Elsevier, vol. 60(C).
    3. Ando, Amy W. & Cadavid, Catalina Londoño & Netusil, Noelwah R. & Parthum, Bryan, 2020. "Willingness-to-volunteer and stability of preferences between cities: Estimating the benefits of stormwater management," Journal of Environmental Economics and Management, Elsevier, vol. 99(C).
    4. Randriamaro, Mary Tiana & Cook, Joseph, 2022. "The value of time, with and without a smartphone," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 138-146.
    5. Mikołaj Czajkowski & Marek Giergiczny & Jakub Kronenberg & Jeffrey Englin, 2019. "The Individual Travel Cost Method with Consumer-Specific Values of Travel Time Savings," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 74(3), pages 961-984, November.
    6. Patrick Lloyd‐Smith, 2021. "The economic benefits of recreation in Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 54(4), pages 1684-1715, November.
    7. Li, Liqing & Long, Dede, 2022. "Household Preference for Impure Public Goods - an Application of Community Gardens," 2022 Annual Meeting, July 31-August 2, Anaheim, California 322142, Agricultural and Applied Economics Association.
    8. Xie, Lusi & Adamowicz, Wiktor & Kecinski, Maik & Fooks, Jacob R., 2022. "Using economic experiments to assess the validity of stated preference contingent behavior responses," Journal of Environmental Economics and Management, Elsevier, vol. 114(C).

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