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Potential Use of the Life Satisfaction Approach to Value Nonmarket Goods and Services

Cheryl Joy Fernandez (), David Raitzer () and Edimon Ginting ()
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Cheryl Joy Fernandez: Asian Development Bank
David Raitzer: Asian Development Bank
Edimon Ginting: Asian Development Bank

No 569, ADB Economics Working Paper Series from Asian Development Bank

Abstract: Economic analysis often faces challenges in the valuation of nonmarket goods and services. The traditional set of nonmarket valuation tools for measuring Marshallian economic surplus has limitations related to potential bias in stated preferences and endogeneity of nonmarket amenity placement in revealed preference studies. The life satisfaction approach offers a Hicksian compensating variationbased alternative, which uses self-reported subjective well-being to calculate the marginal rate of substitution of income for nonmarket amenities or services. The conceptual basis for the approach is explained and illustrated with an example from Iloilo, Philippines. Recommendations are offered for future application of the technique in the economic analysis of investment projects.

Keywords: economic analysis; life satisfaction; natural disasters; Philippines; valuation; well-being (search for similar items in EconPapers)
JEL-codes: D61 D69 D90 H40 Q51 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2019-01-29
New Economics Papers: this item is included in nep-env, nep-hap, nep-ppm and nep-sea
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Citations: View citations in EconPapers (2)

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