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A Nonparametric Revealed Preference Approach to Measuring the Value of Environmental Quality

Blundell, R; Blow, L; (2018) A Nonparametric Revealed Preference Approach to Measuring the Value of Environmental Quality. Environmental and Resource Economics , 69 (3) pp. 503-527. 10.1007/s10640-018-0229-9. Green open access

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Abstract

We develop an approach to valuing non-market goods using nonparametric revealed preference analysis. We show how nonparametric methods can also be used to bound the welfare effects of changes in the provision of a non-market good. Our main context is one in which the non-market good affects the marginal utility of consuming a related market good. This can also be framed as a shift in the taste for, or quality of, the market good. A systematic approach for incorporating quality/taste variation into a revealed preference framework for heterogeneous consumers is developed. This enables the recovery of the minimal variation in quality required to rationalise observed choices of related market goods. The variation in quality appears as a adjustment to the price for related market goods which then allows a revealed preference approach to bounding compensation measures of welfare effects to be applied.

Type: Article
Title: A Nonparametric Revealed Preference Approach to Measuring the Value of Environmental Quality
Open access status: An open access version is available from UCL Discovery
DOI: 10.1007/s10640-018-0229-9
Publisher version: http://dx.doi.org/10.1007/s10640-018-0229-9
Language: English
Additional information: © The Author(s) 2018 Open Access This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made.
Keywords: Revealed preference, Bounds, Public good valuation, Inequality restrictions, Semiparametric regression, Changing tastes
UCL classification: UCL > Provost and Vice Provost Offices
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of SandHS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/10044410
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