PT - JOURNAL ARTICLE
AU - Huang, Ju-Chin
TI - Deriving Benefit Measures with Higher Precision: A Study of Economic Values of Air Quality
AID - 10.3368/le.86.4.727
DP - 2010 Nov 01
TA - Land Economics
PG - 727--745
VI - 86
IP - 4
4099 - http://le.uwpress.org/content/86/4/727.short
4100 - http://le.uwpress.org/content/86/4/727.full
SO - Land Econ2010 Nov 01; 86
AB - A calibration strategy using ridge regression to generate more precise estimates for a particular parameter in a model is proposed. Formulae to compute the proposed ridge estimates from standard ordinary least squares (OLS) results are provided. The strategy is applied to recomputing marginal effects of air pollution on property values for 30 housing studies. Results show that ridge estimates are superior to the OLS estimates under the mean squared error criterion. The same strategy can be used to reestimate key parameters of interest in other applications, such as price elasticities for demand forecasts or the value of a statistical life from hedonic wage regressions. (JEL C14, Q51)