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

Mogens Fosgerau; Thomas Bue Bjørner

doi:10.1016/j.trb.2005.03.001

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

Mogens Fosgerau^*, Thomas Bue Bjørner

^*Corresponding author for this work

Department of Economics

17 Citations (Scopus)

Abstract

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.

Original language	English
Journal	Transportation Research Part B: Methodological
Volume	40
Issue number	2
Pages (from-to)	164-178
Number of pages	15
ISSN	0191-2615
DOIs	https://doi.org/10.1016/j.trb.2005.03.001
Publication status	Published - Feb 2006

Keywords

Joint ordered discrete-continuous models
Noise annoyance
Valuation of noise reduction
Willingness to pay

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abstract = "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.",

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AB - 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.

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

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Keywords

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