Just in case you were wondering, here is how I'd go about estimating some benefits of [ -- insert case study here -- ]. Very, very dang pathbreaking.
The economic benefits of [--insert case study here--] can be estimated in three ways: the hedonic price method, the travel cost method or the contingent valuation method. The hedonic price method captures benefits that accrue to homeowners. The travel cost method captures benefits that accrue to recreationists who travel to the recreation site. The hedonic price method and the travel cost method are known as revealed preference methods. The contingent valuation method, one type of stated preference method, can be used to capture the benefits that accrue to homeowners, recreationists and others who might benefit from [--insert case study here--] (e.g., environmentalists). Further, other types of stated preference methods can be used to significantly enhance results from based hedonic price method and travel cost method data analysis.
The logic behind the hedonic price method is that households will choose to move to locations with amenities. The increased demand for housing will increase housing prices. The differences in housing prices reflect the amenity value. In order to implement the hedonic price method property value data must be collected for residences before or after [--insert case study here--] and/or in areas with and without [--insert case study here--]. Econometric analysis can be used to estimate the impacts on housing price of a [--insert case study here--]. The hedonic price method analysis may be limited if data collection is difficult given the quasi-experimental nature of the [--insert case study here--] case study. A stated preference survey of homeowners can be used to augment the basic hedonic price method analysis. Potential homeowners could be presented hypothetical houses and locations and asked which home they prefer. Part of the study design would include homes with and without [--insert case study here--]. Econometric analysis could be used to determine the economic benefits of [--insert case study here--].
The logic behind the travel cost method is that recreationists prefer locations with better recreation opportunities. Consider recreational fishing. To the extent that [--insert case study here--] would lead to better fishing opportunities, information on recreational fishing trips, travel costs and catch rates (or other measures of stock abundance) could be gathered using existing or new recreation surveys. The site choice and intensity decisions can be analyzed econometrically to determine the economic benefits of improved catch resulting from [--insert case study here--]. A stated preference survey of recreationists can be used to augment the basic travel cost method analysis. Recreationists could be presented hypothetical recreation locations and asked which location they prefer. Part of the study design would include locations with and without [--insert case study here--]. Econometric analysis could be used to determine the economic benefits of [--insert case study here--].
The contingent valuation method is a stated preference approach that presents willingness-to-pay questions to respondents. The survey requires description of a realistic hypothetical scenario including a policy implementation rule and a payment rule. In the [--insert case study here--] context, this could be achieved by asking survey respondents if they would be willing to donate money into a [--insert case study here--] fund. The policy implementation rule would be that the [--insert case study here--] if enough funds were generated by donations. Another payment option that could be explored includes taxes. The willingness-to-pay responses can be econometrically analyzed to estimate the economic benefits of [--insert case study here--].
Each of these approaches is considered a nonmarket valuation method. As such, the estimates of economic benefits must consider validity issues. Validity is the extent to which the measure of a theoretical construct (i.e., economic benefits) is accurately measured. Validity can be enhanced by using (1) multiple valuation methods and (2) combining different types of data.
Convergent validity is attained if two valuation approaches yield the same answer. For example, if travel cost method estimates are equal to contingent valuation method estimates then more confidence can be placed in both estimates. Combining revealed and stated preference data allows another type of validity test by determining if individual decision makers are consistent in their decisions. Another rationale for multi-methods and data combination is the limitations of revealed preference and stated preference data. Revealed preference data is constrained by history, among other more technical limitations. Using historical data may be difficult when simulating the effects of [--insert case study here--]. Stated preference data is constrained by the hypothetical nature of the survey task. Respondents may not fully understand the decision context or not take it as seriously as a real world decision. Combining stated preference and revealed preference data allows more accurate estimates of behavior beyond historical experience and grounds hypothetical behavioral models in real world behavioral models.
Each of the stated preference approaches described above require data collection with household surveys. Data can be collected with in-person, telephone, mail and internet surveys (in order of declining survey cost). Combining survey modes can be used to obtain different types of data in a cost effective way. In the [--insert case study here--] context, a telephone survey could be conducted with a random sample of residents within two [--insert case study here--], one with a [--insert case study here--] and one without. Baseline recreation, housing and willingness to pay data could be collected in the phone survey. Respondents could then be directed to a follow-up internet survey to provide additional information about home location and recreation location decisions. Information from this multi-mode survey could be used to estimate the economic benefits of [--insert case study here--] in each of the ways described above. The benefit estimates would cover the complete range of societal benefits (active users, passive users and nonusers) and offer a number of opportunities to generate accurate and valid estimates.
The logic behind the hedonic price method is that households will choose to move to locations with amenities. The increased demand for housing will increase housing prices. The differences in housing prices reflect the amenity value. In order to implement the hedonic price method property value data must be collected for residences before or after [--insert case study here--] and/or in areas with and without [--insert case study here--]. Econometric analysis can be used to estimate the impacts on housing price of a [--insert case study here--]. The hedonic price method analysis may be limited if data collection is difficult given the quasi-experimental nature of the [--insert case study here--] case study. A stated preference survey of homeowners can be used to augment the basic hedonic price method analysis. Potential homeowners could be presented hypothetical houses and locations and asked which home they prefer. Part of the study design would include homes with and without [--insert case study here--]. Econometric analysis could be used to determine the economic benefits of [--insert case study here--].
The logic behind the travel cost method is that recreationists prefer locations with better recreation opportunities. Consider recreational fishing. To the extent that [--insert case study here--] would lead to better fishing opportunities, information on recreational fishing trips, travel costs and catch rates (or other measures of stock abundance) could be gathered using existing or new recreation surveys. The site choice and intensity decisions can be analyzed econometrically to determine the economic benefits of improved catch resulting from [--insert case study here--]. A stated preference survey of recreationists can be used to augment the basic travel cost method analysis. Recreationists could be presented hypothetical recreation locations and asked which location they prefer. Part of the study design would include locations with and without [--insert case study here--]. Econometric analysis could be used to determine the economic benefits of [--insert case study here--].
The contingent valuation method is a stated preference approach that presents willingness-to-pay questions to respondents. The survey requires description of a realistic hypothetical scenario including a policy implementation rule and a payment rule. In the [--insert case study here--] context, this could be achieved by asking survey respondents if they would be willing to donate money into a [--insert case study here--] fund. The policy implementation rule would be that the [--insert case study here--] if enough funds were generated by donations. Another payment option that could be explored includes taxes. The willingness-to-pay responses can be econometrically analyzed to estimate the economic benefits of [--insert case study here--].
Each of these approaches is considered a nonmarket valuation method. As such, the estimates of economic benefits must consider validity issues. Validity is the extent to which the measure of a theoretical construct (i.e., economic benefits) is accurately measured. Validity can be enhanced by using (1) multiple valuation methods and (2) combining different types of data.
Convergent validity is attained if two valuation approaches yield the same answer. For example, if travel cost method estimates are equal to contingent valuation method estimates then more confidence can be placed in both estimates. Combining revealed and stated preference data allows another type of validity test by determining if individual decision makers are consistent in their decisions. Another rationale for multi-methods and data combination is the limitations of revealed preference and stated preference data. Revealed preference data is constrained by history, among other more technical limitations. Using historical data may be difficult when simulating the effects of [--insert case study here--]. Stated preference data is constrained by the hypothetical nature of the survey task. Respondents may not fully understand the decision context or not take it as seriously as a real world decision. Combining stated preference and revealed preference data allows more accurate estimates of behavior beyond historical experience and grounds hypothetical behavioral models in real world behavioral models.
Each of the stated preference approaches described above require data collection with household surveys. Data can be collected with in-person, telephone, mail and internet surveys (in order of declining survey cost). Combining survey modes can be used to obtain different types of data in a cost effective way. In the [--insert case study here--] context, a telephone survey could be conducted with a random sample of residents within two [--insert case study here--], one with a [--insert case study here--] and one without. Baseline recreation, housing and willingness to pay data could be collected in the phone survey. Respondents could then be directed to a follow-up internet survey to provide additional information about home location and recreation location decisions. Information from this multi-mode survey could be used to estimate the economic benefits of [--insert case study here--] in each of the ways described above. The benefit estimates would cover the complete range of societal benefits (active users, passive users and nonusers) and offer a number of opportunities to generate accurate and valid estimates.