A Repeated Sampling Technique in Assessing the Validity of Benefit Transfer in Valuing Non-Market Goods

Abstract

This paper applies the hedonic technique to investigate the effectiveness of benefit transfer methodologies in a statistically controlled, repeated sampling scheme. Benefit transfers are carried out on several sets of 1,000 pairs of random, non-overlapping sub-samples drawn from a Chicago housing sample. The study finds that even under extremely favorable transfer conditions, quality of transferred benefits is poor, and there is no gain in precision in adopting function transfer over unit value transfer. In the presence of dissimilarities between two sites, however, quality of transferred benefits deteriorates further and function transfer appears more appropriate than unit value transfer. (JEL D6, Q26)