Lookup NU author(s): Emeritus Professor Ken Willis
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This chapter briefly defines cultural heritage, before considering the relative merits of stated preference (SP) methods in relation to revealed preference (RP) in deriving economic values for cultural goods. Section 2 outlines the distinction between contingent valuation (CV) and discrete choice experiment (CE) methods, before outlining some applications of CV methods in estimating consumer surplus, and maximum revenue, for cultural goods. It discusses some issues with CV, prior to Section 3 which outlines CEs, experimental design, and random utility theory underlying choice experiments. Section 4 presents the standard conditional logit (CL) and multinomial logit (MNL) models, together with their use in valuing cultural heritage. The restrictive assumptions of CL and MNL models are described as a prelude to presentations of other CE models which relax some or all of the restrictive assumptions of the CL and NML models. These models are the nested logit, covariance-heterogeneity, heteroscedastic extreme value, mixed logit random parameter, error component, multinomial probit, and latent class or finite mixture models. Applications of each of these models to cultural heritage are provided. Section 5 considers how price and economic values are derived from utility estimates, before discussing values directly derived in willingness-to-pay (WTP) space, and the importance of calculating market share and those who are willing to pay for an improvement to the status quo level of a cultural good. Section 6 explores how CE models can be extended or enhanced by the consideration of interaction effects between the attributes of a cultural good, controlling for choice complexity, addressing non-attendance of attributes in respondent’s choices, considering the scale problem, asymmetry between WTP and willingness-to-accept (WTA) compensation for the equivalent loss of a cultural good, the issue of utility maximisation or regret minimisation, the importance of considering respondent’s attitudes in choice models, and finally models combining revealed and stated preference to include what people actually demand, as well as what they say they would demand, in evaluating preferences and values for cultural goods. The conclusion, Section 7, brief summarises the chapter and provides some thoughts for future research.
Author(s): Willis KG
Editor(s): Ginsburgh, VA; Throsby D;
Publication type: Book Chapter
Publication status: Published
Book Title: Handbook of the Economics of Art and Culture
Place Published: Amsterdam, The Netherlands
Library holdings: Search Newcastle University Library for this item