Recovering Individual Preferences for Non‐Market Goods: A Collective Travel‐Cost Model

Abstract

AbstractTraditional recreation demand models do not make a distinction between a household and an individual as the reference decision‐making unit, thus assuming that a family maximizes a single utility function, even if the family consists of different individuals. Such models ignore the possibility of family members' divergent preferences for non‐market goods. This study proposes a novel approach—the collective travel‐cost model (CTCM)—to eliciting individual preferences for a non‐market good, such as a recreation site, by using revealed preference data. This approach accounts for the intra‐household resource allocation and the role of each household member's preferences. We show that the collective travel‐cost model can be applied to estimating a recreation demand model that yields individual welfare estimates appropriate for policy analysis of non‐market goods, such as the willingness to pay to access a recreation site. We find that how resources are distributed within the household reflects significant differences in welfare measures.