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On the Use of Subjective Well-Being Data for Environmental Valuation

Abstract

This paper explores the potential of using subjective well-being (SWB) data to value environmental attributes. A theoretical framework compares this method, also known as the life-satisfaction approach, with the standard hedonic pricing approach, identifying their similarities and differences. As a corollary, we show how SWB data can be used to test for the equilibrium condition implicit in the hedonic approach (i.e., equality of utility across locations). Results for Ireland show that the equilibrium condition required by the hedonic pricing approach in Irish markets does not hold. They also show that air quality, in the baseline specification, and warmer climate, across all the specifications, have a significant positive impact on SWB. Their associated monetary estimates, however, seem too large.

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Abbreviations

HP:

Hedonic pricing

SWB:

Subjective well-being

GIS:

Geographic information systems

MRS:

Marginal rate of substitution

CS:

Compensating surplus

ES:

Equivalent surplus

ED:

Electoral district

LS:

Life satisfaction

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Correspondence to Susana Ferreira.

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Ferreira, S., Moro, M. On the Use of Subjective Well-Being Data for Environmental Valuation. Environ Resource Econ 46, 249–273 (2010). https://doi.org/10.1007/s10640-009-9339-8

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  • DOI: https://doi.org/10.1007/s10640-009-9339-8

Keywords

  • Environmental valuation
  • Happiness
  • Hedonic pricing
  • Subjective well-being
  • Life satisfaction
  • Climate
  • Air pollution