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

Abstract

Traditional 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.

JEL Classification: D13, H41, Q26, Q51.