Divergence in alternative Hicksian welfare measures: the case of revealed preference for public amenities

Abstract

SUMMARYThis paper investigates the divergence between the two Hicksian welfare measures of non-traded amenity improvement associated with housing. First, the Hicksian surplus measures for amenity changes are analytically developed based on explicit specification of utility structures. A hedonic two-stage approach is then applied to empirically show that, for quantity changes, in contrast to hypothetical markets, divergence in real market is small. The paper also analytically develops expressions for the income and substitution effects and empirically shows that for a given income effect, the greater the substitution effect the smaller the divergence between the two measures.

Benefits of Hazardous Waste Cleanup: New Evidence From Survey‐ and Market‐based Property Value Approaches

“…The number of noninteracted explanatory variables in the present hedonic regression is smaller compared to what one often finds in other studies, such as in Palmquist (1984), Zabel and Kiel (2000), and Chattopadhyay (2002). However, unlike the cited studies, which cover one or more metropolitan centers, the present study is limited to a number of suburban towns and, as a result, we did not find more factors that could have influenced house prices.…”

“…28 28 It is common in hedonic literature to explore a number of functional forms for hedonic specifications (Cropper et al, 1988; Chattopadhyay, 2002). We tried the semilog form, but found the double‐log functional form performs better than the semilog form with respect to R 2 and with respect to the number of significant variables.…”

Hedonic Pricing of Rice Attributes, Market Sorting, and Gains from Quality Improvement in the Beninese Market

“…Still, the practice seems to have remained that of using implicit marginal prices as direct measures of welfare benefits since they represent the WTP for a marginal change in an attribute (see, for instance, Kim, Phipps, and Anselin 2003). Harrison and Rubinfeld (1978) and Chattopadhyay (2002) use implicit marginal price functions (employed in the second-stage regression of Rosen's (1974) procedure) to obtain estimates of household benefits from nonmarginal improvement in quality attributes in the housing market.…”

Perception towards Public Amenities in Malaysia

“…Findings such as this have led to the development of 'subjective social indicators', which are collected by means of sample surveys, in which individuals are asked about their living conditions as well as how they feel about these conditions (Chattopadhyay, 2002). This type of approach offers a unique opportunity to relate reported objective characteristics with perceptual and affective responses in such areas as health, housing, environment and working conditions on the part of the same individuals (Bastien et al, 2012).…”