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Welfare Estimation Using The Fourier Form: Simulation Evidence For The Recreation Demand Case

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  • Michael D. Creel

Abstract

The paper considers the estimation of welfare measures when the functional form of demand is unknown. An adaptation of an argument of Gallant (1987) is used to show that welfare estimators based on a Fourier functional form for demand will be consistent under weak assumptions. Simulation evidence is presented for equivalent variation. True demand is a generalized Box-Cox function, estimated demand is a Fourier form, and equivalent variation is estimated by applying Vartia's (1983) algorithm to the estimated demand function. The estimator of equivalent variation has small asymptotic bias in the case of the assumed family of data generating processes. © 1997 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology

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  • Michael D. Creel, 1997. "Welfare Estimation Using The Fourier Form: Simulation Evidence For The Recreation Demand Case," The Review of Economics and Statistics, MIT Press, vol. 79(1), pages 88-94, February.
    • Handle: RePEc:tpr:restat:v:79:y:1997:i:1:p:88-94
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    Citations

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    Cited by:

    1. John Crooker & Joseph Herriges, 2004. "Parametric and Semi-Nonparametric Estimation of Willingness-to-Pay in the Dichotomous Choice Contingent Valuation Framework," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 27(4), pages 451-480, April.
    2. Shaikh, Sabina L., 1998. "A Whale Of A Good Time: Exploring Flexibility In The Recreation Demand Model," 1998 Annual meeting, August 2-5, Salt Lake City, UT 20826, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    3. Crooker, John & Kling, Catherine L., 2000. "Nonparametric Bounds on Welfare Measures: A New Tool for Nonmarket Valuation," Journal of Environmental Economics and Management, Elsevier, vol. 39(2), pages 145-161, March.
    4. Chotikapanich, Duangkamon & Griffiths, William E., 1998. "Carnarvon Gorge: a comment on the sensitivity of consumer surplus estimation," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 42(3), pages 1-13.
    5. Tristan D. Skolrud, 2017. "Reducing Approximation Error in the Fourier Flexible Functional Form," Econometrics, MDPI, vol. 5(4), pages 1-16, December.
    6. Silvia Ferrini & Carlo Fezzi, 2012. "Generalized Additive Models for Nonmarket Valuation via Revealed or Stated Preference Methods," Land Economics, University of Wisconsin Press, vol. 88(4), pages 782-802.
    7. Steven F. Koch & Adel Bosch, 2009. "Inflation and the Household: Towards a Measurement of the Welfare Costs of Inflation," Working Papers 200917, University of Pretoria, Department of Economics.
    8. Sabina L. Shaikh & Douglas M. Larson, 2003. "A Two-Constraint Almost Ideal Demand Model of Recreation and Donations," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 953-961, November.
    9. Aliakbar KHOSRAVINEJAD, 2008. "Welfare Effects of Food Desubsidization For Iranian Urban Households (The Index Number and Demand System Approach)," EcoMod2008 23800063, EcoMod.
    10. Sarker, Rakhal & Surry, Yves R., 2003. "The Fast Decay Process In Recreational Demand Activities And The Use Of Alternative Count Data Models," Working Papers 34147, University of Guelph, Department of Food, Agricultural and Resource Economics.

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