University of California, Berkeley
Spring 2003
ARE 262 NON-MARKET VALUATION
LECTURES: Wednesdays, 4 - 7pm, Giannini 234
1. Introduction – Welfare theory background
The economic concept of value; cost versus preference as the basis of value; the rehabilitation of consumer’s surplus; integrabily theory.
2. Utility Models for Quality.
The Generalized Lancaster Model vs the Houthakker-Theil (Hedonic Cost) Model. Relationship to Household production Model. Weak Complementarity and Non-Use Value. Welfare Measures of Quality Change.
3. Issues in Single-Equation Travel Cost.
Measuring price; treatment of time; choice of functional form and estimation of welfare measure; count data models; censored data; on-site sampling and sample selection bias.
4. Discrete Choice Models. Model Formulation and Estimation. Welfare Measurement.
5. Sampling for valuation surveys
6. Modeling Corner Solutions and Discrete/Continuous Choices.
7. Hedonic Models
8. Averting Behavior and Expenditures. The Environment as an Input
9. Contingent Valuation -- Basic Approaches
10. Contingent Valuation -- Advanced Topics
11. Questionnaire design for CV surveys
12. Ranking, Rating, Conjoint Analysis, and Choice Experiments
13. Valuing Life and Health
Department of Agricultural & Resource Economics Michael Hanemann
University of California, Berkeley
Spring 2003
ARE 262 NON-MARKET VALUATION
READINGS
You should consult the following by way of background on utility theory and demand analysis:
Richard Cornes, Duality and Modern Economics, Cambridge, 1992.
Angus Deaton and John Muellbauer, Economics and Consumer Behavior, Cambridge, 1980.
Angus Deaton, The Analysis of Household Surveys, Johns Hopkins for the World Bank, 1997.
Donald W. Katzner, Static Demand Theory, Macmillan 1970
Stephen Pudney, Modeling Individual Choice: The Econometrics of Corners, Kinks and Holes,
Blackwell, 1989.
For non-market valuation, consult
Timothy C. Haab and Kenneth E. McConnell, Valuing Environmental and Natural Resources:
The Econometrics of Non-Market Valuation, Edward Elgar Publishers, Cheltenham, UK
(2003) – OUR TEXT FOR THE COURSE
Robert Cameron Mitchell and Richard T. Carson, Using Surveys to Value Public Goods: The
Contingent Valuation Method. Washington, DC: Resources for the Future, 1989.
John Braden and Charles Kolstad (eds.) Measuring the Demand for Environmental Quality,
Amsterdam: North-Holland, 1991
A. Myrick Freeman, The Measurement of Environmental and Resource Values, Washington, DC:
Resources for the Future, 1993
Ian Bateman and Kenneth G. Willis, Valuing Environmental Preferences: The Theory and
Practice of the Contingent Valuation Method in the US, EU and Developing Countries.
Oxford University Press, 1999.
Jordan J. Louviere, David A. Hensher and Joffre Swait, Stated Choice Methods: Analysis and
Applications. Cambridge University Press, 2000.
Ian Bateman et al. Economic Valuation with Stated Preference Technique: A Manual Edward Elgar, 2002
Daniel J. Phaneuf and V. Kerry Smith, Recreation Demand Models. Chapter in K-G Maler and J.
Vincent (eds) Handbook of Environmental Economics, North-Holland (forthcoming)
Kenneth Train, Discrete Choice Methods with Simulation, Cambridge University Press (2003)
1. Introduction – Welfare theory background
Michael Hanemann, Economic Valuation (working paper)
Michael Hanemann, Preface, in Stale Navrud (ed), Pricing the European Environment, Scandinavian
University Press, 1992; pp 9-14.
Cornes, pp 208-221.
Daniel T. Slesnick, “Empirical Approaches to the Measurement of Welfare,” Journal of Economic Literature, December 1998, especially pp 2108-2123 , and 2125-2128.
Marco Becht, “The Theory and Estimation of Individual and Social Welfare Measures,” Journal of Economic Surveys, Vol 9 No. 1, 1995, pp 53-87.
2. Evolution of the Travel Cost Method and the Lancaster-Maler Model of the Demand for Quality
Hanemann , Preface, pp 15-18. Phaneuf and Smith, pp 1-8, 14 - 22, 40-48.
Haab and McConnell, Chap 6.
Hanemann W. M., “Quality and Demand Analysis” in G. C. Rausser (ed) New Directions in Econometric Modeling and Forecasting in US Agriculture North-Holland 1982, pp 59-98
3. Single-Equation Travel Cost
Haab and McConnell, Chapter 7
Phaneuf and Smith 9 - 13, 23-33.
4. Discrete Choice Models. Model Formulation and Estimation. Welfare Measurement.
Haab and McConnell Chap 8.
Phaneuf and Smith, pp 55-67; 70-73.
Louuviere, Hensher & Swait, Chaps 3, 4.
5. Sampling for valuation surveys
Pearce et al. Chap 4.
Phaneuf and McConnell, pp 76-80.
6. Modeling Corner Solutions and Discrete/Continuous Choices.
Phaneuf and Smith, pp 67-69
Hanemann (working paper)
7. Hedonic Models
Haab and McConnell Chapter 9.
Chapter by Palmquist in Braden & Kolstad
8. Averting Behavior and Expenditures. The Environment as an Input
Freeman, Chap 9
Chapter by Adams and Crocker in Braden & Kolstad
9. Contingent Valuation -- Basic Approaches
Haab and McConnell, Chap 2, 4
Hanemann and Kanninen (chapter in Bateman and Willis)
Pearce et al. Chapter 6-8
10. Contingent Valuation -- Advanced Topics
Haab and McConnell, Chap 3, 5
Hanemann and Kanninen (chapter in Bateman and Willis)
11. Questionnaire design for CV surveys
Pearce et al, Chapter 5
12. Ranking, Rating, Conjoint analysis, and Choice Experiments
Haab and McConnell, Chap 10
Hanemann and Kanninen (chapter in Bateman and Willis)
Louuviere, Hensher & Swait, Chaps 7, 8.
13. Valuing a Life.
Freeman Chap 10
Chapter by Cropper and Freeman in Braden & Kolstad.