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Generalized Additive Models for Nonmarket Valuation via Revealed or Stated Preference Methods

  • Silvia Ferrini
  • Carlo Fezzi

Single-site recreation demand and dichotomous choice contingent valuation analyses are typically conducted by implementing models containing strong parametric assumptions, which are rarely underpinned by theoretical arguments. This work illustrates how these assumptions can be relaxed and the estimation conducted semiparametrically by using generalized additive models (GAMs). This approach directly estimates the degree of the variables’ nonlinearities from the data, thereby avoiding subjective choices on the smoothing parameters and offering many advantages when compared to the conventional modeling techniques that dominate the environmental economics literature. Additionally, this paper illustrates how GAMs can be specified to construct theoretically consistent willingness-to-pay measures.

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File URL: http://le.uwpress.org/cgi/reprint/88/4/782
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Article provided by University of Wisconsin Press in its journal Land Economics.

Volume (Year): 88 (2012)
Issue (Month): 4 ()
Pages: 782-802

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Handle: RePEc:uwp:landec:v:88:y:2012:iv:1:p:782-802
Contact details of provider: Web page: http://le.uwpress.org/

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  1. John Crooker & Catherine L. Kling, 1998. "Nonparametric Bounds on Welfare Measures: A New Tool for Nonmarket Valuation," Center for Agricultural and Rural Development (CARD) Publications 99-wp208, Center for Agricultural and Rural Development (CARD) at Iowa State University.
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  14. Bateman, Ian J. & Day, Brett H. & Georgiou, Stavros & Lake, Iain, 2006. "The aggregation of environmental benefit values: Welfare measures, distance decay and total WTP," Ecological Economics, Elsevier, vol. 60(2), pages 450-460, December.
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  18. Chuan-Zhong Li, 1996. "Semiparametric Estimation of the Binary Choice Model for Contingent Valuation," Land Economics, University of Wisconsin Press, vol. 72(4), pages 462-473.
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