Augmenting travel cost models with contingent behavior data

This paper proposes contingent behavior survey questions as a valuable supplement to observed data in travel cost models of non-market demand for recreational resources. A set of observed and contingent behavior results for each survey respondent allows the researcher to control for individual heterogeneity by taking advantage of panel data methods when exploring the nature of respondent demands. The contingent scenarios also provide opportunities to (a) test for differences between observed and contingent preferences and/or (b) assess likely demands under conditionsbeyond the domain of observed variation in costs or resource attributes. Most importantly, contingent scenarios allow the researcher to imposeexogenously varying travel costs. Exogenous imposition of travel costs together with panel methods reduces the omitted variables bias that plagues observed-data travel cost models of recreational demand. Using a convenience sample of data for illustrative purposes, we show how to estimate the demand for recreational angling by combining observed and contingent behavior data. We begin with simple naive pooled Poisson models and progress to more theoretically appropriate fixed effects panel Poisson specifications.The authors are at the University of Nevada and UCLA, respectively. We gratefully acknowledge the comments of both Scott Shonkwiler and participants in the W133 meetings in Santa Fe, New Mexico and for research material provided by Wayne Gray. The data were provided by Rang Narayanan. Research assistance was provided by Jerry McGraw and Natalie Tucker. Research partially supported by the Nevada Experiment Station. Any errors or omissions remain the authors' responsibility.     

More distance,more remittance? Remitting behavior,travel cost,and the size of the informal channel

The rising number of foreign workers in Italy during the last 15 years has led to a conspicuous increase in the amount of remittances sent abroad. In this paper, we examine the determinants of remittance outflows originated in Italy and transferred abroad through registered financial intermediaries. After controlling for a wide set of socioeconomic regressors, we document a strong positive relation between remittances and the cost of travel between Italy and the migrants' respective home countries. We interpret this result as indirect evidence of unrecorded flows, since the relation between remittances and travel cost should be non‐significant unless geographical proximity permits remitters to switch to informal (non‐observable) transmission mechanisms. Moreover, using data on temporal and monetary costs for a subset of bilateral corridors, we also find remittances to be negatively correlated with high transaction costs and low speed of transfer. We rely on this empirical evidence and on a model of migrants' remitting behavior to present new strategies for estimating the size of the informal outflow.     

旅游需求函数的研究

由于旅游区价格具有一定的刚性和稳定性，采用直接观察法不易得出旅游需求函数。文章通过对旅行成本法的研究，首次提出试用旅游复合成本的变化来替代旅游区价格的变化，综合考虑收入、时间的机会成本等因素，使用出游率和旅游复合成本2个指标，建立旅游需求函数，揭示旅游需求规律，探索出一种简易可行计算旅游需求函数的方法。     

Estimating the economic benefits of acidic rock drainage clean up using cost shares

This paper reports the results of a stated preference study that estimates the economic value for cleaning up acid rock drainage in Colorado's Snake River watershed. In contrast to much of the existing literature, the present study emphasizes benefit estimation for three implementing projects rather than benefit estimation for general changes in water quality or large scale water quality policy. The focus on implementing projects delivers information that is specifically relevant to current decisions being faced in the watershed. While valuation questions in most stated preference studies present costs that have no relation to actual project costs, this study presents a new cost share approach. Project costs are estimated and then valuation questions present different local cost shares to subjects. This approach facilitates stated cost variation necessary for estimating the mean of the distribution of project values without resorting to experimentally designed, fictitious stated costs. In addition to estimating the mean value, which facilitates benefit cost analysis, the study also provides median value estimates, which provide insights into the political feasibility of these projects. Study results suggest that local cost shares on the order of 20%-40%, depending on the project, are politically feasible.     

Women's lib explanation of paradoxical results in estimations of the value of travel time and subsequent biases in cost-benefit studies

Estimates of the value of time derived from differences in the value of residential locations lead to valuations much below the wage rate. Estimates of valuation for recreational travel time are often equal to the wage rate. This paradox is explained by appealing to a model in which time spent at home must partially be used for household work, and therefore time spent traveling saves the traveler, but not his family, some costs. This evidence can be explained if it is the traveler who chooses the location of his family's residence.     

Spatially induced disparities in users' and non-users' WTP for water quality improvements—Testing the effect of multiple substitutes and distance decay

Costs and benefits of water restoration projects are not necessarily evenly spread out over the entire area affected by the project. The physical distribution of benefits is, therefore, an important parameter when conducting economic analyses of water restoration projects. Two particularly relevant spatial issues relate to 1) the location of the population relative to the location of the waterbody, and 2) the availability and characteristics of substitute water bodies.Based on a contingent valuation (CV) study of the demand for restoring Odense River in Denmark a spatial demand model which accounts for travel time both to the river subject for valuation and to potential substitute sites is estimated. It is concluded that the spatial distribution of benefits is unlikely to be homogeneously determined by a one-dimensional spatial model. Moreover, the results suggest that the effect of spatial issues on preferences varies between users and non-users. For non-users the spatial impacts from potential substitutes significantly reduce demand for improvements in Odense River. This indicates that focus on estimation of distance decay effects may be an important tool in relation to ensuring proper geographical delimitation of the population in a given context.     

COSTLY AGEING OR COSTLY DEATHS? UNDERSTANDING HEALTH CARE EXPENDITURE USING AUSTRALIAN MEDICARE PAYMENTS DATA*

In health economics and health care planning, the observation that age cohorts are generally positively correlated with per capita health expenditures is often cited as evidence that population ageing is the main driver of health care costs. Several recent studies, however, challenge this view. Zweifel et al. (1999 ) and Felder et al. (2000 ), for example, find that individuals incur the highest health care costs around the time before their death. Thus, they argue, it is proximity to death rather than ageing that is driving health care costs. This paper examines the issue by estimating a two‐equation exact aggregation demand model using Australian Medicare payments data over an eight‐year period (1994–2001). The results suggest that once proximity to death is accounted for, population ageing has either a negligible or even negative effect on health care demand.     

Spring cleaning: rural water impacts, valuation, and property rights institutions

Using a randomized evaluation in Kenya, we measure health impacts of spring protection, an investment that improves source water quality. We also estimate households' valuation of spring protection and simulate the welfare impacts of alternatives to the current system of common property rights in water, which limits incentives for private investment. Spring infrastructure investments reduce fecal contamination by 66%, but household water quality improves less, due to recontamination. Child diarrhea falls by one quarter. Travel-cost based revealed preference estimates of households' valuations are much smaller than both stated preference valuations and health planners' valuations, and are consistent with models in which the demand for health is highly income elastic. We estimate that private property norms would generate little additional investment while imposing large static costs due to above-marginal-cost pricing, private property would function better at higher income levels or under water scarcity, and alternative institutions could yield Pareto improvements.     

Multi-product costs and standby capacity derived from queuing theory: the case of Belgian hospitals

Empirical hospital cost function studies can be divided into two categories: studies estimating traditional multi-product cost functions and studies including demand uncertainty (assuming that hospitals provide standby capacity to cope with uncertain demand and stressing that the relationship between the uncertain demand, excess capacity and costs should be investigated). Most studies include (the inverse of) the occupancy rate in a relatively basic cost function. The first contribution of this paper is to incorporate an indicator of reserve capacity into a genuine multi-product cost function. The second contribution is to propose an alternative indicator to proxy the reserve margin. The often used occupancy rate has an important shortcoming: the same occupancy rate can hide different turnaway probabilities and waiting times, obscuring the true degree of reservation quality. Since turnaway probabilities and waiting times are typical queuing theory indicators, an indicator for average waiting time (derived from queuing theory) is incorporated into a proper multi-product cost function to capture the degree of standby capacity into a proper multi-product cost function. The study uses 1997 data on Belgian general care hospitals to estimate a multi-product cost function and calculate cost elasticities, marginal costs and the degree of economies of scale. The results further show that providing standby capacity has a significant impact on total costs.     

Using Non Market Valuation to Inform the Choice Between Permits and Fees in Environmental Regulation

The purpose of this short note is to open an exploration regarding the use of non market valuation to help guide the selection of economically efficient pollution control instruments. As long as non market valuation techniques can correctly estimate the slope of the marginal benefit of abatement curve, this information along with engineering cost estimates of the unit costs or slope of the marginal abatement cost will provide useful information to policy makers in choosing between fees and permits. An illustrative review of the literature suggests that both stated and revealed preference methods have estimated slopes of marginal benefit functions for reducing several pollutants. To investigate the efficiency of permits versus fees, an illustrative review of corresponding marginal abatement costs is also made. For air pollutants affecting visibility, the slope of the marginal benefit curve is far greater than the slope of the marginal abatement costs, suggesting permits as the efficient instrument. For nitrates in groundwater used for drinking, the marginal benefit curve is flatter than the rather steep marginal abatement cost, suggesting fees/taxes would be a more efficient economic instrument. We hope this note stimulates more emphasis in non market valuation on estimating the slope of the marginal benefit function to enhance environmental economists ability to make policy recommendations regarding the choice of pollution instruments for specific pollutants.      

Endogenously chosen travel costs and the travel cost model: an application to mountain biking at Moab,Utah

The travel cost model is frequently used to estimate net willingness to pay for recreation at remote sites by using the visitor's travel costs as a proxy for the price of recreation. However, some concern has been raised over the validity of using the visitor's stated travel costs as a proxy for price. This paper addresses some of these concerns, by examining the possible over-estimation of consumer surplus due to endogenously chosen travel costs. This paper extends past theoretical work for the linear model by developing a correction for endogenously chosen travel costs in more commonly used nonlinear models such as the Poisson or count data model. Also provided is the first empirical test of the presence of endogeneity and an estimate of the magnitude of the error from ignoring endogeneity in travel costs. After applying this test and the correction to data that was gathered for mountain biking at Moab, Utah the estimate of consumer surplus falls from US $153 to US $135, which is a 12% reduction.     

A new valuation question: analysis of and insights from interval open-ended data in contingent valuation

This paper introduces a type of open-ended valuation question where respondents state their willingness to pay in the form of an interval rather than a point estimate. Allowing the response to be expressed as an interval has advantages compared to traditional valuation questions: it captures potential valuation uncertainty, facilitates interpretation of uncertainty and most importantly, provides a richer set of information about individuals’ preferences. Furthermore, an open-ended willingness to pay format has advantages if a survey is carried out in more than one country. Too little is known about valuation uncertainty to represent willingness to pay only as an exact value. Therefore, this value should be complemented by upper and lower boundary estimates. In this paper I present new methods for estimating these different values. The methods are illustrated with results from a survey concerning wild salmon in the Vindel River, northern Sweden. The results suggest that the upper and lower boundaries provide a kind of confidence interval for the willingness to pay, which is encouraging for estimating these values to characterise willingness to pay. The results also illustrate that some earlier criticism in the literature of open-ended questions does not apply to the question presented in this paper.     

Third‐degree price discrimination in the presence of congestion externality

This paper analyzes third‐degree price discrimination of a monopoly airline in the presence of congestion externality when all markets are served. The model features the business‐passenger and leisure‐passenger markets where business passengers exhibit a higher time valuation, and a less price‐elastic demand, than leisure passengers. Our main result is the identification of the time‐valuation effect of price discrimination, which can work in the opposite direction as the well‐known output effect on welfare. This time‐valuation effect clearly explains why discriminating prices can improve welfare even when this is associated with a reduction in aggregate output.     

Domestic Jobs and Foreign Wages

It is plausible that the labour demand decisions of multinational corporations (MNCs) depend not only on domestic, but also on foreign labour costs. This hypothesis is tested by estimating labour demand equations for a sample of Swedish MNCs. Indeed, higher foreign costs increase an MNC's Swedish employment and reduce its foreign employment. As MNCs become more important in many OECD countries, the responsiveness of domestic output and employment to foreign labour costs is likely to increase.     

A discrete choice contingent valuation estimate of the value of Kenai King salmon

A new method for estimating the demand curve for publicly supplied goods when quantities are restricted to a few discrete levels is introduced. The method involves fitting a conditional logit model to choices from a set of survey options in which price and quantity are both varied and consumer attitudes are explicitly controlled. The estimated parameters of the valuation function serve to trace the marginal value of the good at each level of hypothetical consumption in survey data. We apply the method to the valuation of salmon on Alaska's Kenai River. We find that there is a distinct kink in the marginal valuation function and that sport fishermen may place a negative marginal value on fish permits exceeding their desired catch levels.     

旅客行为时间价值的Logit计算模型改进研究

本文详细分析了旅客行为时间价值的影响因素,并在此基础上分析了用Logit模型确定旅客行为时间价值的理论方法。本文尝试对原有的计算模型进行改进,将旅客收入这一变量引入Logit模型,分析旅客收入对旅客出行决策的影响,以更准确地估测旅客时间价值、提高投资决策的准确性。     

林地估价技术体系研究

林地估价是绿色国民经济核算体系框架背景下林地资产化管理的一项新工作。从林地的收益估算理论入手,结合现行林地和林木资产评估方法,在林地分等定级相关研究成果基础上,建立以评估林地基准地价为核心的一整套林地估价技术体系,以期为今后绿色国民经济框架下,森林资源的商品化推进工作奠定基础。     

Alcohol availability and alcohol-related motor vehicle accidents

The impact of alcohol availability on alcohol-related motor vehicle accidents centres on the sensitivity of consumption to changes in the full price of alcohol – the dollar price of alcohol plus the time and travel costs associated with acquiring alcohol. Reducing the number of licensed alcohol vendors raises the time and travel costs of alcohol; if alcohol consumption is responsive to this price increase, then drinking and driving may decrease. Using data on the 254 counties in the US state of Texas, the results in this paper show that alcohol availability has a significant impact on alcohol-related motor vehicle accidents. Thus, alcohol vendor restrictions can be an important policy tool in reducing such accidents.     

Using spatial microsimulation to account for demographic and spatial factors in environmental benefit transfer

This paper presents a simulation-based modelling approach for estimating total visitor numbers and amenity values for prospective non-priced open-access outdoor recreation sites. To begin, the geographic extent of the market for recreation at a policy site is estimated using data from a similar study site. The population residing within this geographic area is simulated using a spatial microsimulation model and GIS techniques and an individual-level ‘visitor arrival function’ is then transferred across this simulated population. This allows the latent demand for visits to the policy site by each simulated individual to be predicted and summed, providing an estimate of the total potential demand for recreation at the site. Combining this with an economic value measure of a visit provides an estimate of the potential amenity value of the policy site. The approach is applied to Moyode Wood, a small-scale forest in the West of Ireland, and estimates the potential total economic value of recreation at €0.4 million for the site. The research represents the first time that spatial microsimulation has been used in environmental benefit transfer and shows how it can be used to control for differences in demographic and spatial factors between study and policy sites. It also demonstrates how individual-level single-site travel cost models estimated using on-site survey data can be used to predict demand at alternative policy sites.     

Physical energy cost serves as the “invisible hand” governing economic valuation: Direct evidence from biogeochemical data and the U.S. metal market

Energy supply is mandatory for the production of economic value. Nevertheless, tradition dictates that an enigmatic “invisible hand” governs economic valuation. Physical scientists have long proposed alternative but testable energy cost theories of economic valuation, and have shown the gross correlation between energy consumption and economic output at the national level through input-output energy analysis. However, due to the difficulty of precise energy analysis and highly complicated real markets, no decisive evidence directly linking energy costs to the selling prices of individual commodities has yet been found. Over the past century, the US metal market has accumulated a huge body of price data, which for the first time ever provides us the opportunity to quantitatively examine the direct energy-value correlation. Here, by analyzing the market price data of 65 purified chemical elements (mainly metals) relative to the total energy consumption for refining them from naturally occurring geochemical conditions, we found a clear correlation between the energy cost and their market prices. The underlying physics we proposed has compatibility with conventional economic concepts such as the ratio between supply and demand or scarcity's role in economic valuation. It demonstrates how energy cost serves as the “invisible hand” governing economic valuation. Thorough understanding of this energy connection between the human economic and the Earth's biogeochemical metabolism is essential for improving the overall energy efficiency and furthermore the sustainability of the human society.