Environmental Conditions,Reservation Prices,and Time on the Market for Housing

A general analytical model to describe the impact of environmental disamenities on duration of sales is derived. A statistical technique to recover a sellers reservation price is proposed. An econometric procedure that consistently estimates market duration and a sellers reservation price is described. An application to the impact of highway noise on property values and market duration is presented. The estimation results show that, while highway noise has a significant negative impact on forming reservation prices and predicting sale prices, the noise effect on duration of sales is not statistically significant. Empirical evidence also shows a negative impact of market duration on reservation prices, which indicates an updating process for reservation prices over time.     

Semi-parametric discrete choice measures of willingness to pay

A semi-parametric discrete choice method is proposed to recover welfare measures from individual choice data. The proposed method is compared with the traditional binary choice models in an application to measure benefits of recreation trips.     

Part-Whole Bias in Contingent Valuation: Will Scope Effects Be Detected with Inexpensive Survey Methods?

The purpose of this paper is to test for scope effects with the contingent valuation method. We use data from a telephone survey focusing on water quality improvements in the Albemarle and Pamlico Sounds in North Carolina. We find that the willingness to pay estimates are sensitive to the scope of the policy. These results suggest that the use of inexpensive survey methods may not be the cause of the failure to detect scope effects in some recent contingent valuation studies.     

Post‐Injury Work Outcomes Revisited

We use data for Ontario workers with permanent impairments resulting from work‐related injuries to investigate the complex relationships among post‐injury work outcomes: wages, accommodations, returning to the same or different employer, and duration of work absence. We argue the different aspects of post‐injury work experience may be jointly determined, making post‐injury job characteristics endogenous in a duration model. To explore the endogeneity issues we instrument post‐injury job variables from first‐stage equations and compare results from this “informed” model to a “naive” model that treats the variables as exogenous. We find that returning to one's pre‐injury employer is associated with more favorable post‐injury work outcomes, including higher wages, greater likelihood of job accommodations, and shorter durations of work absence relative to workers who change employers. We also find substantial differences between the naive and informed models, with accommodations having the predicted negative effect on duration only after we control for endogeneity.     

The Representative Consumer Approximation Bias in Discrete Choice Welfare Analysis

Discrete choice welfare analysis is essential in non-market valuation to accompany studies using choice experiments and recreation choice models. McFadden (in: Melvin, Moore, Riezman (eds) Trade, theory and econometrics: essays in honor of John S. Chipman, Routledge, London, 1999) shows that discrete choice welfare measures derived by the common representative consumer approach can be biased under nonlinear income effects, and the percentage bias increases monotonically with the size of quality improvement. We present contrary results that percentage measurement errors in such welfare measures can go either direction and provide conditions under which the direction of bias can be identified. We also show that price and non-price variables play different roles in discrete choice welfare analysis.     

Measuring recreation benefits of quality improvements with revealed and stated behavior data

We propose a combined revealed and stated behavior estimation method to measure recreation benefits of a fixed quality improvement that directly addresses the issues of variation in environmental quality beyond the observed range and new participation induced by higher quality. We survey a sample of the general population, including non-participants, to obtain stated preference data for trips based on a policy-relevant estuarine quality improvement. Panel recreation demand models that take into account new participants induced by the higher quality are estimated and used to derive total consumer surplus.     

Weak complementarity and production

This paper describes how weak complementarity, a common assumption to characterize consumer preferences for recovering measures of willingness to pay for nonmarketed environmental resources, can be used to evaluate the effects of pollution that may affect profits or costs. In such cases, pollution serves as an externality imposed by third parties on production activities.     

Model selection and misspecification in discrete choice welfare analysis

This study extends the work by Herriges and Kling (1997) to further evaluate the impact of discrete choice modelling techniques on welfare measures. Particularly, we evaluate the performance of the increasingly popular mixed logit model and the computational strategy for deriving discrete choice welfare measures. Our simulation results show that model misspecification can have profound effects on welfare measures. In general, the flexible mixed logit model performs relatively well in the presence of misspecification. However, when the nesting structure can be appropriately identified (via statistical tests and a priori knowledge/experience), the nested logit model provides more reliable welfare measures than the mixed logit model.