IDEAS home Printed from https://ideas.repec.org/p/ris/adbewp/0569.html
   My bibliography  Save this paper

Potential Use of the Life Satisfaction Approach to Value Nonmarket Goods and Services

Author

Listed:
  • Fernandez, Cheryl Joy

    (Asian Development Bank)

  • Raitzer, David

    (Asian Development Bank)

  • Ginting , Edimon

    (Asian Development Bank)

Abstract

Economic analysis often faces challenges in the valuation of nonmarket goods and services. The traditional set of nonmarket valuation tools for measuring Marshallian economic surplus has limitations related to potential bias in stated preferences and endogeneity of nonmarket amenity placement in revealed preference studies. The life satisfaction approach offers a Hicksian compensating variationbased alternative, which uses self-reported subjective well-being to calculate the marginal rate of substitution of income for nonmarket amenities or services. The conceptual basis for the approach is explained and illustrated with an example from Iloilo, Philippines. Recommendations are offered for future application of the technique in the economic analysis of investment projects.

Suggested Citation

  • Fernandez, Cheryl Joy & Raitzer, David & Ginting , Edimon, 2019. "Potential Use of the Life Satisfaction Approach to Value Nonmarket Goods and Services," ADB Economics Working Paper Series 569, Asian Development Bank.
    • Handle: RePEc:ris:adbewp:0569
    as

    Download full text from publisher

    File URL: https://www.adb.org/sites/default/files/publication/482736/ewp-569-life-satisfaction-approach-nonmarket-goods-services.pdf
    File Function: Full text
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Bernard M. S. van Praag & Barbara E. Baarsma, 2005. "Using Happiness Surveys to Value Intangibles: The Case of Airport Noise," Economic Journal, Royal Economic Society, vol. 115(500), pages 224-246, January.
    2. Welsch, Heinz & Biermann, Philipp, 2014. "Electricity supply preferences in Europe: Evidence from subjective well-being data," Resource and Energy Economics, Elsevier, vol. 38(C), pages 38-60.
    3. Heinz Welsch, 2002. "Preferences over Prosperity and Pollution: Environmental Valuation based on Happiness Surveys," Kyklos, Wiley Blackwell, vol. 55(4), pages 473-494, November.
    4. Vemuri, Amanda W. & Costanza, Robert, 2006. "The role of human, social, built, and natural capital in explaining life satisfaction at the country level: Toward a National Well-Being Index (NWI)," Ecological Economics, Elsevier, vol. 58(1), pages 119-133, June.
    5. Tsurumi, Tetsuya & Managi, Shunsuke, 2015. "Environmental value of green spaces in Japan: An application of the life satisfaction approach," Ecological Economics, Elsevier, vol. 120(C), pages 1-12.
    6. Welsch, Heinz, 2002. "Preferences over Prosperity and Pollution: Environmental Valuation Based on Happiness Surveys," Kyklos, Wiley Blackwell, vol. 55(4), pages 473-494.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Alejandro Arrieta & Juan Pablo Sarmiento & Meenakshi Chabba & Weiwei Chen, 2020. "Valuing disaster risk reduction neighborhood interventions in informal settlements of Latin American and the Caribbean," PLOS ONE, Public Library of Science, vol. 15(11), pages 1-10, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Welsch, Heinz & Ferreira, Susana, 2014. "Environment, Well-Being, and Experienced Preference," International Review of Environmental and Resource Economics, now publishers, vol. 7(3-4), pages 205-239, December.
    2. Welsch, Heinz & Biermann, Philipp, 2014. "Fukushima and the preference for nuclear power in Europe: Evidence from subjective well-being data," Ecological Economics, Elsevier, vol. 108(C), pages 171-179.
    3. Eleftherios Giovanis, 2019. "Worthy to lose some money for better air quality: applications of Bayesian networks on the causal effect of income and air pollution on life satisfaction in Switzerland," Empirical Economics, Springer, vol. 57(5), pages 1579-1611, November.
    4. Stanca, Luca, 2009. "With or without you? Measuring the quality of relational life throughout the world," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(5), pages 834-842, October.
    5. Jarvis, Diane & Stoeckl, Natalie & Liu, Hong-Bo, 2016. "The impact of economic, social and environmental factors on trip satisfaction and the likelihood of visitors returning," Tourism Management, Elsevier, vol. 52(C), pages 1-18.
    6. Erda Wang & Nannan Kang & Yang Yu, 2017. "Valuing Urban Landscape Using Subjective Well-Being Data: Empirical Evidence from Dalian, China," Sustainability, MDPI, vol. 10(1), pages 1-20, December.
    7. Knight, S.J; Howley, P.;, 2017. "Can clean air make you happy? Examining the effect of nitrogen dioxide (NO2) on life satisfaction," Health, Econometrics and Data Group (HEDG) Working Papers 17/08, HEDG, c/o Department of Economics, University of York.
    8. Heinz Welsch & Philipp Biermann, 2017. "Energy Affordability and Subjective Well-Being: Evidence for European Countries," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3).
    9. Katrin Rehdanz, 2007. "Species Diversity And Human Well-Being: A Spatial Econometric Approach," Working Papers FNU-151, Research unit Sustainability and Global Change, Hamburg University, revised Oct 2007.
    10. Heinz Welsch & Philipp Biermann, 2014. "Energy Prices, Energy Poverty, and Well-Being: Evidence for European Countries," Working Papers V-369-14, University of Oldenburg, Department of Economics, revised Sep 2014.
    11. Maddison, David & Rehdanz, Katrin, 2011. "The impact of climate on life satisfaction," Ecological Economics, Elsevier, vol. 70(12), pages 2437-2445.
    12. Ambrey, Christopher L. & Fleming, Christopher M., 2011. "Valuing scenic amenity using life satisfaction data," Ecological Economics, Elsevier, vol. 72(C), pages 106-115.
    13. Paul Dolan & Robert Metcalfe, 2008. "Comparing Willingness-to-Pay and Subjective Well-Being in the Context of Non-Market Goods," CEP Discussion Papers dp0890, Centre for Economic Performance, LSE.
    14. Christopher Ambrey & Christopher Fleming, 2014. "Public Greenspace and Life Satisfaction in Urban Australia," Urban Studies, Urban Studies Journal Limited, vol. 51(6), pages 1290-1321, May.
    15. Luechinger, Simon, 2010. "Life satisfaction and transboundary air pollution," Economics Letters, Elsevier, vol. 107(1), pages 4-6, April.
    16. Zerrahn, Alexander & Krekel, Christian, 2015. "Sowing the Wind and Reaping the Whirlwind? The Effect of Wind Turbines on Residential Well-Being," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112956, Verein für Socialpolitik / German Economic Association.
    17. Berlemann, Michael, 2015. "Hurricane Risk, Happiness and Life Satisfaction. Some Empirical Evidence on the Indirect Effects of Natural Disasters," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113073, Verein für Socialpolitik / German Economic Association.
    18. Juncal Cuñado & Fernando Gracia, 2013. "Environment and Happiness: New Evidence for Spain," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 112(3), pages 549-567, July.
    19. Bruno S. Frey & Simon Luechinger & Alois Stutzer, 2007. "Calculating Tragedy: Assessing The Costs Of Terrorism," Journal of Economic Surveys, Wiley Blackwell, vol. 21(1), pages 1-24, February.
    20. Ferreira, Susana & Akay, Alpaslan & Brereton, Finbarr & Cuñado, Juncal & Martinsson, Peter & Moro, Mirko & Ningal, Tine F., 2013. "Life satisfaction and air quality in Europe," Ecological Economics, Elsevier, vol. 88(C), pages 1-10.

    More about this item

    Keywords

    economic analysis; life satisfaction; natural disasters; Philippines; valuation; well-being;
    All these keywords.

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • D69 - Microeconomics - - Welfare Economics - - - Other
    • D90 - Microeconomics - - Micro-Based Behavioral Economics - - - General
    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:adbewp:0569. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Orlee Velarde (email available below). General contact details of provider: https://edirc.repec.org/data/eradbph.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.