interpreting economic time series this paper explores some of the implications for econometric practice of the principle that people s observed behavior will change when their constraints change in dynamic contexts a proper definition of people s constraints includes among them laws of motion that describe the evolution of the taxes they must pay and the prices of the goods that they buy and sell changes in agents perceptions of these laws of motion or constraints will in general produce changes in the schedules that describe the choices they make as a function of the information that they possess until very recently received dynamic econometric practice ignored this principle the practice of dynamic econometrics should be changed so that it is consistent with the principle that people s rules of choice are influenced by their constraints this is a substantial undertaking and involves major adjustments in the ways that we formulate estimate and simulate econometric models

resolving differences in willingness to pay and willingness to accept reply gwendolyn c morrison 1997 raises a logical point regarding our experimental test of the divergence between willingness to pay wtp and willingness to accept wta measures of economic value shogren et al 1994 she argues that our design does not provide a true test of the existence of a fundamental endowment effect since we did not control for the potential of a pivoting indifference map daniel kahneman et al 1990 she concludes that even though our ev idence shows that the mean wtp and wta bids for market goods with close substitutes e g candy bars and coffee mugs converge after market experience the endowment effect might still be alive and well albeit at statisti cally insignificant levels

assessing management options for weed control with demanders and non demanders in a choice experiment the yellow floating heart is a water weed causing nuisance problems in swedish water courses an economic analysis where various management options are considered is required using a choice experiment we estimate the benefits of a weed management program and perform a cost benefit analysis in order to be able to distinguish between those who have a demand for a program from those who do not we introduce a way to distinguish demanders from non demanders in the choice experiments using a simple cost benefit rule we find that cutting the weed in certain places in the lake can be justified

determinants of economic well being among u s farm operator households participation in government programs has a mild impact on the economic well being of u s farm households major factors that determine farm household prosperity are the primary operator s education level and ethnicity education level of the spouse and other characteristics such as forward purchasing of inputs use of contract shipping of products having a succession plan farm ownership and location in a metro area this article uses the 2001 agricultural resource management survey arms as well as relative and an absolute measure to assess u s farm households economic well being the relative measure compares the income and wealth position of farm households relative to median income and median wealth of the general population the absolute measure adds annualized wealth to a farm household s income

modelling winners and losers in contingent valuation of public goods appropriate welfare measures and econometric analysis contingent valuation is now the most widely used method for valuing non marketed goods in cost benefit analysis yet despite the fact that many externalities manifest themselves as costs to some and benefits to others most studies restrict willingness to pay to being non negative this can result in significant errors in policymaking this paper examines the importance of this explores appropriate welfare measures for assessing losses and gains demonstrates how these can be elicited explicitly highlights the sensitivity of the results of such studies to the econometric specification employed and suggests ways of dealing with it finally the implica tions for policy are examined assessment including passive use values this technique has become the most widely used method for placing values on non marketed goods this paper examines some outstanding issues in relation to the validity of the method as a basis for policy making in particular most studies ignore the fact that many externalities manifest themselves as costs to some and benefits to others in addition the results of contingent valuation studies are often quite sensitive to the econometric specification assumed the significance of these issues is examined techniques for their resolution are outlined and the implications for public policy are highlighted the importance for economists of the debate on the validity of contingent valuation was emphasised in a series of papers from a symposium on the contingent valuation method cvm published in the journal of economic perspectives in 1994 in his paper portney 1994 predicted that whether the economics profession liked it or not the cvm would inevitably play a role in public policy formulation and therefore it was important that economists be aware of the controversies and have their say on the topic portney s prediction was correct and contingent valuation has become a routine approach to valuing environmental goods with hundreds of studies being produced each year 1 the cvm places a value on a change in the provision of a public good by asking households in a survey how much they are willing to pay for the change or the minimum compensation they would require if the change were not to happen the role that contingent valuation studies play in public policy is

a new paradigm for valuing non market goods using referendum data maximum likelihood estimation by censored logistic regression abstract this paper challenges the w m hanemann amer j agr econom 66 332 341 1984 and c sellar j p chavas and j r stoll j environ econom management 13 382 390 1986 utilizations of logit models to estimate the value of non market resources from referendum survey data these data are more informative than conventional choice data the random utility interpretation of logit models is therefore too restrictive bypassing the utility function entirely it will be shown that parameters and standard errors for utility theoretic inverse hicksian demand functions can be extracted directly and much more simply estimated demand functions need not be limited to those corresponding to the linear in parameters utility difference specifications which can be handled by packaged logit programs

determinants of demand for recreational walking trails in ireland abstract the purpose of this work is to explore how recreational walkers marginal willingness to pay for or travel to irish trails is affected by trail attributes we use principal components data reduction z score data normalization and ols regression analyses on two stated preference datasets covering 302 irish and foreign visitors and recreational experts across 15 sites in ireland between 2005 and 2010 findings reveal that endowment and infrastructure attributes emerge as primary influences affecting demand in particular flat or valley endowed trails and infrastructure including signage amenities and maps or leaflets positively affect demand additionally robustness checks suggest farmer access agreements may also be important on the other hand we find that mountain or hill forest and coastal or lake trails as well as income seem to be negatively associated with demand finally we are able to use these in sample results to extrapolate demand for a set of new relatively unimproved trails in an out of sample demand prediction exercise

willingness to pay entrance fees to natural attractions an icelandic case study abstract introducing entrance fees to natural attractions may help counteract the threat of inadequate public funds for site maintenance and management the primary objective of this study is to measure visitors willingness to pay such fees in iceland where no such measurement has previously been undertaken a questionnaire survey based on the contingent valuation method was carried out at two major natural attractions in iceland gullfoss waterfall and skaftafell national park over 92 of the 252 respondents were willing to pay an entrance fee mean amounts and population consumer surplus estimates per season were isk 1 333 and isk 41 million at gullfoss and isk 508 and isk 34 million at skaftafell respectively modest fees would not significantly decrease the demand for these attractions slight differences were found in the willingness to pay according to income attitude towards environmental protection number of previous visits history of paying entrance fees country of residence age and education implications of the empirical study for policy makers and site managers are provided

is the income elasticity of environmental improvements less than one we estimated the income elasticity of environmental improvements for a number of european data sets the value of this parameter is consistently found to be less than one with few exceptions our findings are compared with state of the art contingent valuation studies from other countries we also compared our findings with those reported in the literature on charitable donations and corporate donations these studies show a similar pattern donations decrease as a percentage of income as income increases

differential human capital and structural evolution in agriculture abstract the growth of market capitalism and the technological advances of the last two centuries underlie the relentless process of structural change in agriculture substantial occupational migration out of farming and geographical migration from rural to urban areas is a characteristic of most if not all economies in the 20th century the process of rural urban migration and the resulting urban problems have received considerable attention the fate of the residual farm population has received less scrutiny and is less well understood in the united states we observe considerable farm poverty increasing farm size inequality and a disturbing decay of rural communities for the last half century the problem of low farm incomes has been perceived as a farm problem amenable to solutio by appropriate farm policy in this paper a model is proposed which suggests that farm poverty and inequality are inevitable consequences of a rural urban migration process in which two types of human capital play a fundamental role general human capital determines a person s expected nonfarm income while farming specific human capital determines his her productivity in farming it is argued that inadequate human capital combined with positive rural urban migration cost positive farm technology adoption costs and inelastic demand for farm output can explain persistently high levels of farm poverty and increasing farm size inequality the model suggests that traditional farm policies are inappropriate programs that directly address the problems of inadequate human capital are advocated

the contingent valuation debate why economists should care t he contingent valuation method involves the use of sample surveys questionnaires to elicit the willingness of respondents to pay for generally hypothetical projects or programs the name of the method refers to the fact that the values revealed by respondents are contingent upon the constructed or simulated market presented in the survey a spirited and occasionally mean spirited battle over such methods is currently being waged involving competing factions within the federal government economists and lawyers representing business and environmental groups and interested academics as well at issue is a seemingly quite specific question should environmental regulations currently under development at both the department of the interior and the department of commerce sanction the use of the contingent valuation method in estimating the damage done by spills of oil chemicals or other substances covered by federal law more generally the debate raises broad questions about what economists have to say about the values that individuals place on public or private goods the two papers that follow this one make cases for and against the use of the contingent valuation method my aim here is to provide an overview of the technique and the debate surrounding it i also want to suggest why this debate should matter to economists both professionally and in their roles as citizens and consumers

human capital adaptive ability and the distributional implications of agricultural policy the ability to adapt efficiently to an economic environment that has been altered in a specific way may be a scarce resource in agriculture schultz 1 the setting that i wish to focus upon is one in which farmers face uncertainty about the future course of events production technologies prices and governmental policies and production is dynamic a large share of inputs is purchased from the nonfarm sector and a significant share of output is exported information is available on past realizations of events storing and analyzing information is costly consequently farmers are not assumed to have complete information farmers are assumed to differ in their adaptive ability which is viewed as a form of human capital and to employ efficiently the information that they acquire the thesis of this paper is that adaptive ability is unimportant when the processes generating the variables which farmers take as exogenous are stationary and unaltered however when these processes undergo structural change adaptive ability is expected to affect the quality of production marketing and investment decisions farmers who have superior adaptive skills are expected on average to make better decisions furthermore given the highly competitive nature of u s agriculture successfully adapting to structural change is selective farmers possessing poor adaptive skill can be expected to comprise a relatively large share of the persons forced by economic circumstances to seek alternative employment or retirement provided governmental intervention does not neutralize this selection process when farmers make production marketing and investment plans their decision rules can be expected to incorporate the anticipated values of uncertain variables that are exogeous to their choices the unanticipated components of these exogenous variables however may confuse them and reduce the efficiency of otherwise good plans 2 when shocks occur because of domestic or foreign macroeconomic policy u s agriculture is saddled with transmitting business cycle disturbances

does european regional competitiveness influence sports an analysis of three sports the main objective of this work was to test european regional determinants of sports competitiveness we studied competitiveness in volleyball basketball and handball we developed a theoretical model based on the model proposed by bernard and busse 2004 to analyse the effect of regional institutions and sport environments that can interfere with sports competitiveness to test our model we constructed an enlarged database for all european nuts2 since 1995 which we analysed using panel data techniques censored tobit models our results reveal that the regions that are able to maintain player performance do so by persistent effort and external influences these factors contribute more to regional competitiveness than a region s central location or political prominence

augmenting the world bank s estimates ireland s genuine savings through boom and bust abstract the world bank computes estimates of genuine savings gs a leading indicator of sustainable development for most countries a well established literature has called for methodological enhancement this paper presents augmented estimates of irish gs throughout a period of unprecedented economic expansion and decline 1990 2016 a time series constructed predominantly from national sources includes the most comprehensive coverage of pollutants in the literature surveyed we apply a novel method to aid the property rights designation assessment required for transboundary pollutant accounting in sharp contrast to the world bank s estimates our findings suggest that a modern developed economy can exhibit signs of unsustainability furthermore extended environmental damages drive these results suggesting expanded country specific gs may diverge considerably from the world bank s estimates we find rapid economic development and rapid declines in environmental damages can occur concurrently and on the transition away from an unsustainable path

spike models in contingent valuation spike models allow for a nonzero probability of zero willingness to pay in referendum style contingent valuation experiments they include many of the often used models as special cases and allow various analyses that are not possible in standard applications in this paper the economic rationale for the spike models and their estimation techniques are discussed and empirical illustrations are provided one study suggests that mean willingness to pay is zero and both studies strongly suggest that median wtp is zero these results have some bearing on the continuing debate of the incentive properties of hypothetical surveys and the construction of scenarios in contingent valuation experiments

flexible exchange rates prices and the role of news lessons from the 1970s recent experience with flexible exchange rate systems has led to renewed interest in the operation of foreign exchange markets as reflected in many recent studies of the principal determinants of exchange rates the 1970s witnessed the dramatic alteration of the international monetary system from a regime of pegged exchange rates which prevailed for about a quarter of a century since the bretton woods conference into a regime of flexible though managed rates as a consequence of the emergence of the new legal and economic system traders national governments and international organisations were confronted with new economic problems choices and instruments during the 1970s ex change rates fluctuated widely and inflation rates accelerated the international monetary system had to accommodate extraordinarily large oil related shocks which affected trade flows in goods and assets huge oil payments had to be recycled uncertainties concerning future developments in international politics reached new heights and the prospects for the world economy got gloomier these developments placed unprecedented pressures on the markets for foreign exchange as well as on other asset markets they were associated with a large slide in the value of the us dollar and resulted in speeding up the creation of new institutions like the european monetary system which provided the formal framework for the management of exchange rates among members

negative values in vickrey auctions some people assign negative values for new products sold on laboratory auction blocks i e irradiated meat we explore bidding behavior in two vickrey auctions when people have positive and negative induced values for the good aggregate bidding in the second price auction is precise but biased highest value positive bidders tend to overstate benefits whereas lowest negative bidders understate losses in contrast bidding behavior in the random nth price auction is demand revealing irrespective of induced value but it is imprecise examining on and off margin bidding behavior we cannot conclude that any segments of demand are significantly different than the demand revealing regression line

willingness to pay and willingness to accept how much can they differ comment i agree with the point made by edoh y amiran and daniel a hagen 2003 that there can be a substantial or even infinite divergence between the wta and wtp for a public good even where there is a nonzero elasticity of substitution between market goods and the public good provided that the indifference curves are asymptotically bounded with respect to market goods in the manner they describe this is an important point they are also correct to point out that the elasticity of substitution is a local concept whereas their asymptotic boundedness condition applies also for discrete changes my 1991 paper used a local analysis because it was following the structure of the analysis in robert d willig 1976 and alan randall and john r stoll 1980 i wanted to show that while randall and stoll appeared to extend willig s local result on wta versus wtp from price changes to changes in the quantity of a public good the relevant elasticity was in fact different and involved the substitution elasticity as well as the income elasticity i view these points by amiran and hagen as not two separate results but essentially the same result their asymptotic boundedness condition generalizes my zero elasticity of substitution condition to discrete changes the asymptotic boundedness condition can be expressed as follows assuming a bivariate utility function u x q and given a reference point x q associated with a reference utility level u u x q there exists some q q such that for all q q there exists no x such that u x q u in other words no amount of x can substitute for the reduction in public good from q to q q in the case of a zero elasticity of substitution q q but as amiran and hagen show in their theorem 1 this is unnecessarily restrictive when dealing with a discrete reduction in q furthermore their theorem 2 can be viewed as a special case of their theorem 1 in which q 0 which makes q an essential commodity it is well known in consumer theory that the wta to avoid the loss of an essential market good is infinite their theorem 2 extends this result to the case of an essential nonmarket good but as their theorem 1 shows essentialness is not necessary for an infinite wta the boundedness condition is the key and this implies a fundamental lack of substitutability between money market goods and the public good

consumer s surplus without apology the purpose of this paper is to settle the controversy surrounding consumer s surplus and by so doing to validate its use as a tool of welfare economics i will show that observed consumer s surplus can be rigorously utilized to estimate the unobservable compensating and equivalent variations the correct theoretical measures of the welfare impact of changes in prices and income on an individual i derive precise upper and lower bounds on the percentage errors of approximating the compensating and equivalent variations with consumer s surplus these bounds can be explicitly calculated from observable demand data and it is clear that in most applications the error of approximation will be very small in fact the error will often be overshadowed by the errors involved in estimating the demand curve the results in no way depend upon arguments about the constancy of the marginal utility of income consequently this paper supplies specific empirical criteria which can replace the apologetic caveats frequently employed by those who presently apply consumer s surplus moreover the results imply that consumer s surplus is usually a very good approximation to the appropriate welfare measures to preview below i establish the validity of these rules of thumb for a

efficient estimation methods for closed ended contingent valuation surveys closed ended contingent valuation surveys can be very useful in the evaluation of nonmarket resources respondents merely state whether they would accept or reject a hypothetical threshold amount either as payment for giving up access to the resource or as a fee for its use the authors develop a maximum likelihood procedure which exploits the variation in the threshold values to allow direct and separate point estimates of regression like slope coefficients and error standard deviations without truncation bias their illustration uses data from a survey of recreational fisherman to examine factors which influence individuals willingness to pay copyright 1987 by mit press

the distribution of income and wealth of farm operator households because of the relatively low incomes of people associated with farming in the past income maintenance has been a major focus of farm policy the average money income of families earning farm self employment income in 1983 was 93 of the average money income of other u s families usdc however an average income of farm households has lost much of its meaning because it masks a great deal of variation compared to the past farm households represent a heterogenous population presenting a new challenge to policy makers concerned about framing income maintenance policies the current farm bill debate began in 1984 amidst piecemeal information on increased bankruptcies and general financial stress of farms analysis of the financial leverage and cash flow positions of farm businesses has since been forthcoming johnson baum and prescott however information on the financial well being of those households associated with farming has remained limited the purpose of this paper is to describe the financial well being of farm operator households by measuring their size distribution of personal income and farm equity in 1984 the contribution of each source of income to the total inequality of incomes is also analyzed

dealing with ignored attributes in choice experiments on valuation of sweden s environmental quality objectives using a choice experiment this paper investigates how swedish citizens value three environmental quality objectives in addition a follow up question is used to investigate whether respondents ignored any attributes when responding the resulting information is used in model estimation by restricting the individual parameters for the ignored attributes to zero when taking the shares of respondents who took both the environmental and the cost attributes 52 69 of the respondents into account then the wtp for each attribute changes if the respondents who ignored the attributes have a zero wtp at the same time we find evidence that not all respondents who claimed to have ignored an attribute really did however the most commonly ignored non monetary attributes always have the lowest rankings in terms of wtp across all three environmental objectives thus our results show that instead of ignoring attributes completely respondents seem to put less weight on the attributes they claimed to have ignored

returns to education under collective and household farming in china abstract this paper presents a theoretical model and shows that greater distributional equality decreases individuals returns to education the evidence from a production team in 1977 and the rural household farming in 1990 both in china lends support for the model production team did not reward most members especially for those with higher work points such as the married and males education during most of their lifetimes in distributing work points and labor income however under the household farming system a household s average or highest educational level increased its net agricultural income and total efficiency labor for all households at any average highest educational and age levels thus our findings support the idea that reaping returns from schooling investments requires appropriate economic political environments

addressing heterogeneous preferences using parametric extended spike models some public programs simultaneously provide a mix of non rejectable public goods and public bads consequently some individuals would pay for the program while others might instead need to becompensated in this paper we estimate twoparametric extended spike models that accountfor positive and negative preferences as wellas indifference for the public good weillustrate the models using data on valuationof prescribed burning of underbrush in forests which reduces the risk of catastrophicwildfires but also produces smoke emissions the public bad we compare the two empiricalapproaches to estimate willingness to pay wtp for the program and contrast these results withthose obtained from modeling specificationsthat only account for non negative preferences substantial differences in public net benefitswere found between the most flexible parametricextended spike model and the simple spike modelwhere negative responses were coded as zero anda standard binary logit of only positivebidders the results from the extended spikemodels demonstrated that accounting forindifference and negative values towards thepublic good resulted in substantially lowerwillingness to pay estimates

how does industry affect firm financial structure we examine the importance of industry to firm level financial and real decisions we find that in addition to standard industry fixed effects financial structure also depends on a firm s position within its industry in competitive industries a firm s financial leverage depends on its natural hedge its proximity to the median industry capital labor ratio the actions of other firms in the industry and its status as entrant incumbent or exiting firm financial leverage is higher and less dispersed in concentrated industries where strategic debt interactions are also stronger but a firm s natural hedge is not significant our results show that financial structure technology and risk are jointly determined within industries these findings are consistent with recent industry equilibrium models of financial structure copyright 2005 oxford university press