Robustness of Welfare Estimates for Environmental Goods from Discrete Choice Recreational Demand Models

EPA Grant Number: R823362
Title: Robustness of Welfare Estimates for Environmental Goods from Discrete Choice Recreational Demand Models
Investigators: Herriges, Joseph A. , Kling, Catherine L.
Institution: Iowa State University
EPA Project Officer: Hahn, Intaek
Project Period: September 8, 1995 through September 7, 1997
Project Amount: $87,912
RFA: Socio-Economics (1995) RFA Text |  Recipients Lists
Research Category: Environmental Justice


Accurately measuring the welfare implications of changing environmental conditions is important both to policy development and to the resolution of legal disputes. However, the ability of existing welfare valuation techniques to provide this accuracy remains a concern.

The goals of this project are twofold. First, we are investigating the robustness of welfare estimates obtained from discrete choice recreational demand models with utility theory. A variety of error assumptions are being examined, including multinomial logit, nested multinomial logit, and multinomial probit. Model specification tests are used to distinguish among these alternatives, including tests of correlation and consistency with utility maximization.

Results of this work will provide researchers with needed guidance on the importance of alternative error structures and functional forms in welfare estimates from discrete choice models. Additionally, insight into the usefulness of alternative model specification tests when welfare estimation is the primary purpose of the analysis will be provided.

Supplemental Keywords:

RFA, Economic, Social, & Behavioral Science Research Program, Scientific Discipline, Economics, decision-making, Ecology and Ecosystems, Social Science, Economics & Decision Making, ecosystem valuation, valuation, welfare estimates, environmental assets, discrete choice, utility consistent approaches, environmental policy, error assuptions, psychological attitudes, changing environmental conditions, legal and policy choices, recreational demand

Progress and Final Reports:

  • 1996
  • Final