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Recovering Individual Preferences for Non-Market Goods: A Collective Travel-Cost Model

Martina Menon (), Federico Perali () and Marcella Veronesi ()

American Journal of Agricultural Economics, 2014, vol. 96, issue 2, 438-457

Abstract: Traditional recreation demand models do not make a distinction between a household and an individual as the reference decision-making unit, thus assuming that a family maximizes a single utility function, even if the family consists of different individuals. Such models ignore the possibility of family members' divergent preferences for non-market goods. This study proposes a novel approach-the collective travel-cost model (CTCM)-to eliciting individual preferences for a non-market good, such as a recreation site, by using revealed preference data. This approach accounts for the intra-household resource allocation and the role of each household member's preferences. We show that the collective travel-cost model can be applied to estimating a recreation demand model that yields individual welfare estimates appropriate for policy analysis of non-market goods, such as the willingness to pay to access a recreation site. We find that how resources are distributed within the household reflects significant differences in welfare measures.

Date: 2014
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Related works:
Working Paper: Extensions of the Traditional Travel Cost Model of Non-Market Valuation to a Collective Framework: Evidence from the Field (2007) Downloads
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