Abstract
Since public projects have consequences on individual lives, the estimation of welfare changes is an essential step in the evaluation process (Sect. 6.1). To this end, this chapter gives several tools for eliciting individual preferences. The first set of methods consists of stated preferences techniques whereby individuals declare what their perceptions are of the project and its consequences. Those methods include contingent valuation and discrete choice experiment. The former consists in asking directly a sample of individuals their willingness to pay for a program (Sect. 6.2). Discrete choice experiment on the other hand asks the agents to compare a set of public goods or services. It estimates a multi-attribute utility function based on the idea that agents’ preference for goods depend on the characteristics they contain (Sect. 6.3). The second set of methods comprehends revealed preferences techniques, where preferences are inferred from what is observed on existing markets. For instance, the hedonic pricing method values the implicit price of non-market goods, e.g., proximity of a school or air quality, from their impact on real estate market prices (Sect. 6.4). In the same vein, the travel cost method estimates the demand for recreational sites based on the costs incurred by people for visiting the site (Sect. 6.5). Last, the third set of methods is commonly used for the assessment of public health decisions. It aims to estimate directly the utility levels (e.g., QALY) associated with particular health states (Sect. 6.6).
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
References
Al Janabi, H., Flynn, T., & Coast, J. (2012). Development of a self-reported measure of capability well-being for adults: The ICECAP-A. Quality of Life Research, 21, 167–176.
Arrow, K., Solow, R., Portney, P. R., Leamer, E. E., Radner, R., & Schuman, H. (1993). Report of the NOAA panel on contingent valuation. Federal Register, 58, 4602–4614.
Banzhaf, H. S. (2010). Consumer surplus with apology: A historical perspective on nonmarket valuation and recreation demand. Annual Review of Resource Economics, 2, 18.1–18.25.
Bowen, H. R. (1943). The interpretation of voting in the allocation of economic resources. Quarterly Journal of Economics, 58, 27–48.
Carson, R. T. (2011). Contingent valuation: A comprehensive bibliography and history. Cheltenham: Edward Elgar.
Carson, R. T., & Czajkowski, L. (2014). The discrete choice experiment approach to environmental contingent valuation. In S. Hess & A. Daly (Eds.), Handbook of choice modelling. Cheltenham: Edward Elgar.
Chau, K. W., Yiu, C. Y., Wong, S. K., & Wai-Chung, L. L. (2004). Hedonic price modelling of environmental attributes: A review of the literature and a Hong Kong case study. In Encyclopaedia of life support systems. Oxford: UNESCO.
Ciriacy-Wantrup, S. V. (1947). Capital returns from soil-conservation practices. Journal of Farm Economics, 29, 1181–1196.
Clawson, M. (1959). Method for measuring the demand for, and value of, outdoor recreation. Washington, DC: Resources for the Future, 10.
Clawson, M., & Knetsch, J. L. (1966). Economics of outdoor recreation. Baltimore: Johns Hopkins University Press.
Freeman, A. M. I. I. I. (1971). Air pollution and property values: A methodological comment. Review of Economics and Statistics, 53, 415–416.
Garau, M., Shah, K., Mason, A., Wang, Q., Towse, A., & Drummond, M. (2011). Using QALYs in cancer. Pharmacoeconomics, 29, 673–685.
Hotelling, H. (1947). Letter of June 18, 1947, to Newton B. Drury. Included in the report the economics of public recreation: An economic study of the monetary evaluation of recreation in the National parks, 1949. Mimeographed. Washington, DC: Land and Recreational Planning Division, National Park Service.
Huninck, M., Glasziou, P., Siegel, J., Weeks, J., Pliskin, J., Elstein, A., et al. (2007). Decision making in health and medicine: Integrating evidence and values. Cambridge: Cambridge University Press.
Lancaster, K. J. (1966). A new approach to consumer theory. Journal of Political Economy, 74, 132–157.
McFadden, D. (1973). Conditional logit analysis of qualitative choice behavior. In P. Zarembka (Ed.), Frontiers in econometrics (pp. 105–135). New York: Wiley.
Oppe, M., Devlin, N., van Hout, B., Krabbe, P., & de Charro, F. (2014). A program of methodological research to arrive at the new international EQ-5D-5L valuation protocol. Value in Health, 17, 445–453.
Ridker, R. G., & Henning, J. A. (1967). The determinants of residential property values with special reference to air pollution. The Review of Economics and Statistics, 49, 246–257.
Rosen, S. (1974). Hedonic prices and implicit markets: Product differentiation in perfect competition. Journal of Political Economy, 82, 34–55.
Ryan, M., Gerard, K., & Amaya-Amaya, M. (Eds.). (2008). Using discrete choice experiments to value health and health care. Heidelberg: Springer.
Trice, A. H., & Wood, S. E. (1958). Measurement of recreation benefits. Land Economics, 34, 195–207.
Ungar, W. (2011). Challenges in health state valuation in pediatric economic evaluation. Pharmacoeconomics, 29, 641–652.
Author information
Authors and Affiliations
Rights and permissions
Copyright information
© 2017 Springer International Publishing AG
About this chapter
Cite this chapter
Josselin, JM., Le Maux, B. (2017). Estimation of Welfare Changes. In: Statistical Tools for Program Evaluation . Springer, Cham. https://doi.org/10.1007/978-3-319-52827-4_6
Download citation
DOI: https://doi.org/10.1007/978-3-319-52827-4_6
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-319-52826-7
Online ISBN: 978-3-319-52827-4
eBook Packages: Economics and FinanceEconomics and Finance (R0)