Joint models for noise annoyance and willingness to pay for road noise reduction

Recent contingent valuation (CV) studies of the willingness to pay (WTP) for road noise reduction have used stated annoyance as an independent variable. We argue that this may be inappropriate due to potential endogeneity bias. Instead, an alternative model is proposed that treats both WTP and annoyance as endogenous variables in a simultaneous equation model as a combination of a linear regression with an ordered probit with correlated error terms and possibly common parameters. Thus, information on stated annoyance is utilised to estimate WTP with increased efficiency. Application of the model to a dataset from Copenhagen indicates a potential for improving the precision of the estimate of WTP for noise reduction with CV data.

[1]  Thomas Bue Bjørner,et al.  Combining socio-acoustic and contingent valuation surveys to value noise reduction , 2004 .

[2]  H. G. Jonasson A theory of traffic noise propagation with applications to Leq , 1973 .

[3]  Joseph V. Terza,et al.  Estimating linear models with ordinal qualitative regressors , 1987 .

[4]  J. Heckman Sample selection bias as a specification error , 1979 .

[5]  M Vainio COMPARISON OF HEDONIC PRICE AND CONTINGENT VALUATION METHODS IN URBAN TRAFFIC NOISE CONTEXT , 2001 .

[6]  C. León,et al.  Altruism and the Economic Values of Environmental and Social Policies , 2004 .

[7]  H. Miedema NOISE AND HEALTH: HOW DOES NOISE AFFECT US? , 2001 .

[8]  Kevin J. Boyle,et al.  Trading Taxes vs. Paying Taxes to Value and Finance Public Environmental Goods , 2004 .

[9]  Jeffrey M. Wooldridge,et al.  Solutions Manual and Supplementary Materials for Econometric Analysis of Cross Section and Panel Data , 2003 .

[10]  T. Bjørner,et al.  Valuation of Noise Reduction - Comparing results from hedonic pricing and contingent valuation , 2003 .

[11]  H. Miedema,et al.  Annoyance from transportation noise: relationships with exposure metrics DNL and DENL and their confidence intervals. , 2001, Environmental health perspectives.

[12]  M. Vainio,et al.  Traffic noise and air pollution : valuation of externalities with hedonic price and contingent valuation methods , 1995 .

[13]  P. Champelovier,et al.  Valuing benefits of a road traffic noise abatement programme: a contingent valuation survey , 2000 .

[14]  Contingent Valuation of Traffic Noise Reduction Benefits , 1996 .

[15]  Costas Meghir,et al.  BIVARIATE ALTERNATIVES TO THE TOBIT MODEL , 1987 .