Valuing non-market goods : an analysis of alternative approaches

This study evaluates a number of different approaches which have been used to estimate the value of goods and activities which are not traded in conventional private markets. Experimental evidence is obtained from surveys of individuals' expressed preferences for a number of different goods and services, with emphasis placed on values associated with the natural environment. Both contingent and real questions are used, with subjects' responses to hypothetical situations shown to correspond closely to the behavior which is observed when real transactions are employed. A central concern of this thesis is the comparison of measures of economic value based on an individual's willingness to pay to obtain or retain a good and the amount of compensation which is demanded if it is relinquished. In contrast to prevailing economic theory, these two approaches are shown to yield estimates of value which in many cases are systematically and significantly different. Four principal reasons for this disparity are advanced and each is discussed in the light of evidence developed as part of this as well as previous studies. These are the size of the good or payment level under consideration, the availability of substitutes, the perceived legitimacy of the transaction and the influence of responsibility costs, regret or other process considerations. Empirical evidence is also developed on several other concerns which arise when hypothetical questions are used to value non-market goods. These include the selection of a preferred payment measure, the significance of motivational or cognitive biases, and the potential influence of both framing effects and a number of behavioral considerations. In each case the analysis of individuals' responses leads to an improved understanding of key methodological considerations and suggests additional research opportunities.Graduate and Postdoctoral StudiesGraduat