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Article
What's the use? Welfare estimates from revealed preference models when weak complementarity does not hold
Journal of Environmental Economics and Management
  • Joseph A. Herriges, Iowa State University
  • Catherine L. Kling, Iowa State University
  • Daniel J. Phaneuf, North Carolina State University
Document Type
Article
Publication Version
Submitted Manuscript
Publication Date
1-1-2004
DOI
10.1016/S0095-0696(03)00058-5
Abstract
In this paper we consider the theoretical and empirical ramifications of welfare measurement in revealed preference models when weak complementarity does not hold. In the context of a Kuhn–Tucker model of recreation demand we show that, while it is possible to estimate preferences that do not appear to exhibit weak complementarity, the calculation of welfare measurements from these models requires a cardinal interpretation of preferences that cannot be tested. Furthermore, we reiterate the under-appreciated fact that even traditional use value estimates require a cardinal restriction on preferences that, while often intuitive, also cannot be tested. We demonstrate empirically that the choice of restrictions can have significant ramifications, as use value estimates can vary based on the assumed preference structure.
Comments

This working paper was published as Herriges, Joseph A., Catherine L. Kling and Daniel J. Phaneuf, "What's the use? welfare estimates from revealed preference models when weak complementarity does not hold," Journal of Environmental Economics and Management 47 (2004): 55–70, doi:10.1016/S0095-0696(03)00058-5.

Citation Information
Joseph A. Herriges, Catherine L. Kling and Daniel J. Phaneuf. "What's the use? Welfare estimates from revealed preference models when weak complementarity does not hold" Journal of Environmental Economics and Management Vol. 47 Iss. 1 (2004) p. 55 - 70
Available at: http://works.bepress.com/catherine_kling/107/