Abstract
AbstractWe estimate a travel cost model for the George Washington & Jefferson National Forests using an On-Site Latent Class Poisson Model. We show that the constraints of ad-hoc truncation and homogenous preferences significantly impact consumer surplus estimates derived from the on-site travel cost model. By relaxing the constraints, we show that more than one class of visitors with unique preferences exists in the population. The resulting demand functions, price responsive behaviors, and consumer surplus estimates reflect differences across these classes of visitors. With heterogeneous preferences, a group of ‘local residents’ exists with a probability of 8% and, on average take 113 visits.
Highlights
In previous studies of recreation demand, researchers have dropped visitor observations with very high-frequency trips to recreational sites who may be considered outliers
Whether or not the assumption of homogenous preferences leads to underestimation or overestimation of welfare effects is an empirical question that we seek to answer in the paper using the latent variable approach for modeling recreational trips to the George Washington and Jefferson National Forests in the U.S southeastern region
With chi-square value of 9.38 and 503.74, we find that socio-economic variables are jointly significant at the 5% significance level in modeling demand and membership probabilities, respectively
Summary
In previous studies of recreation demand, researchers have dropped visitor observations with very high-frequency trips to recreational sites who may be considered outliers. Egan and Herriges (2006), Bowker et al (2009), and Sardana, Bergstrom, and Bowker (2016) drop observations with annual trips greater than 52, allowing one trip per weekend By dropping these observations, researchers truncate the distribution of visitors to the site, and the truncation is somewhat ad-hoc, that is, the truncation rule or threshold does not originate from theory. Baerenklau (2010) estimates a zonal travel cost model with heterogeneous preferences using a Poisson specification for backcountry hikers for a Southern California study site They found that the welfare estimates under the constraint of homogeneous preferences were substantially higher as compared to the unconstrained model. Whether or not the assumption of homogenous preferences leads to underestimation or overestimation of welfare effects (e.g., consumer surplus) is an empirical question that we seek to answer in the paper using the latent variable approach for modeling recreational trips to the George Washington and Jefferson National Forests in the U.S southeastern region
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