Abstract
The purpose of this paper is to describe the implications of the collective model of household behavior for the methods used to estimate the economic value of non-marketed environmental resources. After demonstrating how the separability restrictions inherent in the collective model allow individual preference and household income allocation choices to be distinguished, the paper demonstrates how the framework can be used to recover Hicksian consumer surplus. An algebraic example is used to illustrate how the framework can be used in valuing environmental resources.
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Smith, V.K., Van Houtven, G. Recovering Hicksian Consumer Surplus within a Collective Model: Hausman's Method for the Household. Environmental and Resource Economics 28, 153–167 (2004). https://doi.org/10.1023/B:EARE.0000029916.05630.89
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DOI: https://doi.org/10.1023/B:EARE.0000029916.05630.89