Measuring the Cost of Time in Recreation Demand Analysis: Comment

Abstract

In the February 1981 issue of the Journal, McConnell and Strand present a model of recreation demand in which the opportunity cost of an hour of travel to a recreation site is assumed not to equal the average hourly income of the recreating family. They test the model with data from a 1978 survey of sportfishermen in the Chesapeake Bay region. Simply stated, the model hypothesizes that the sportfishermen will behave as if the price of a recreational trip is the sum of cash costs and the opportunity cost of travel time. This opportunity cost is hypothesized to be some ratio, k, of average family income per hour times the travel time. McConnell and Strand estimate the value of k by regressing recreation days against cash costs and opportunity cost of time as separate variables. The ratio of regression coefficients then is an estimate of k. They go on to estimate the ratio, k, of the opportunity cost of travel to the average income for sportfishermen in the Chesapeake Bay region. The authors hypothesize that the ratio (k) falls between 0 and 1, implying that sportfishermen value the time in transit lower than their average income when working. Sufficient conditions for k to equal one include (a) the tax rate is zero, (b) marginal earnings are constant, and (c) nonwork income equals zero. This comment is written to point out certain aspects of the study which may have led to an underestimation of the value of k. It is argued that McConnell and Strand have misspecified their demand equation in such a way that their estimate for k (.612) is biased downward. McConnell and Strand hypothesize the demand relation