A General Method for Valuing Non-Market Goods Using Wellbeing Data: Three-Stage Wellbeing Valuation

Daniel Fujiwara

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: Subjective wellbeing data is becoming increasingly popular in economics research. The wellbeing valuation approach uses wellbeing data instead of data gleaned from preferences to attach monetary values to non-market goods. This method could be an important alternative to preference-based valuation methods such as contingent valuation, but there are a number of significant technical deficiencies with the current methodology. It is argued that the current method derives biased estimates of the value of non-market goods. The paper presents Three-Stage Wellbeing Valuation, a new approach to valuation using subjective wellbeing data that solves for the main technical problems and as a result derives estimates of welfare change and value that are consistent with welfare economic theory. As an example, I derive robust values associated with unemployment using the new approach and compare these to biased values derived from the standard wellbeing valuation method. Values derived from Three-Stage Wellbeing Valuation can be used in cost-benefit analysis.

Keywords: subjective wellbeing; non-market valuation; cost-benefit analysis; unemployment; causal inference (search for similar items in EconPapers)
JEL-codes: C39 D6 D61 I31 J68 (search for similar items in EconPapers)
Date: 2013-07
New Economics Papers: this item is included in nep-hap and nep-hpe
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Persistent link: https://EconPapers.repec.org/RePEc:cep:cepdps:dp1233

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