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Valuing Bundled Attributes: A Latent Characteristics Approach

Author

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  • Linwood H. Pendleton
  • J. Scott Shonkwiler

Abstract

Lancaster wrote that attributes of goods may combine to produce characteristics that are the primary units of consumption (1966). Often, the attributes of goods are bundled and cannot be separated. We show that if attributes are technically bundled then valuation analyses that treat these attributes as independent will be wrong. We show that a latent characteristics approach improves upon other methods by incorporating more information about attributes than standard methods and by directly modeling the linkages among attributes. For the case of wilderness hiking, the latent approach provides a statistically better model of site choice than other standard methods.

Suggested Citation

  • Linwood H. Pendleton & J. Scott Shonkwiler, 2001. "Valuing Bundled Attributes: A Latent Characteristics Approach," Land Economics, University of Wisconsin Press, vol. 77(1), pages 118-129.
  • Handle: RePEc:uwp:landec:v:77:y:2001:i:1:p:118-129
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    References listed on IDEAS

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    1. Adamowicz, Wiktor & Swait, Joffre & Boxall, Peter & Louviere, Jordan & Williams, Michael, 1997. "Perceptions versus Objective Measures of Environmental Quality in Combined Revealed and Stated Preference Models of Environmental Valuation," Journal of Environmental Economics and Management, Elsevier, vol. 32(1), pages 65-84, January.
    2. Vuong, Quang H, 1989. "Likelihood Ratio Tests for Model Selection and Non-nested Hypotheses," Econometrica, Econometric Society, vol. 57(2), pages 307-333, March.
    3. White, Halbert, 1982. "Maximum Likelihood Estimation of Misspecified Models," Econometrica, Econometric Society, vol. 50(1), pages 1-25, January.
    4. Englin, Jeffrey & Mendelsohn, Robert, 1991. "A hedonic travel cost analysis for valuation of multiple components of site quality: The recreation value of forest management," Journal of Environmental Economics and Management, Elsevier, vol. 21(3), pages 275-290, November.
    5. Jones, Larry E, 1988. "The Characteristics Model, Hedonic Prices, and the Clientele Effect," Journal of Political Economy, University of Chicago Press, vol. 96(3), pages 551-567, June.
    6. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132-132.
    7. Englin Jeffrey & Shonkwiler J. S., 1995. "Modeling Recreation Demand in the Presence of Unobservable Travel Costs: Toward a Travel Price Model," Journal of Environmental Economics and Management, Elsevier, vol. 29(3), pages 368-377, November.
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    Citations

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    Cited by:

    1. Vredin Johansson, Maria & Heldt, Tobias & Johansson, Per, 2006. "The effects of attitudes and personality traits on mode choice," Transportation Research Part A: Policy and Practice, Elsevier, vol. 40(6), pages 507-525, July.
    2. Concu, Giovanni B. & Schilizzi, Steven, 2002. "The Rold of Space in Environmental Valuation," 2002 Conference (46th), February 13-15, 2002, Canberra 125074, Australian Agricultural and Resource Economics Society.
    3. Kimitoshi Sato, 2015. "Anthropogenic Climate Change in an Integrated Energy Balance Model of Global and Urban Warming," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 4(1), pages 1-21, December.
    4. repec:spr:soinre:v:133:y:2017:i:2:d:10.1007_s11205-016-1375-5 is not listed on IDEAS
    5. Rimal, Arbindra & Moon, Wanki & Balasubramanian, Siva K., 2008. "Changes in Soy Based Food Consumption, 2001 and 2007," 2008 Annual Meeting, February 2-6, 2008, Dallas, Texas 6888, Southern Agricultural Economics Association.
    6. Baltas, George & Saridakis, Charalampos, 2013. "An empirical investigation of the impact of behavioural and psychographic consumer characteristics on car preferences: An integrated model of car type choice," Transportation Research Part A: Policy and Practice, Elsevier, vol. 54(C), pages 92-110.
    7. Di Ciommo, Floridea & Monzón, Andrés & Fernandez-Heredia, Alvaro, 2013. "Improving the analysis of road pricing acceptability surveys by using hybrid models," Transportation Research Part A: Policy and Practice, Elsevier, vol. 49(C), pages 302-316.
    8. repec:ags:aare02:125072 is not listed on IDEAS

    More about this item

    JEL classification:

    • Q20 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - General
    • Q26 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Recreational Aspects of Natural Resources

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