Abstract
The household production function approach is often used in environmental economics. The basic idea is that the household produces recreation, for example, using time and purchased commodities as inputs. The relationship between the output (recreation) and the inputs used up is covered by a conventional production function. Various environmental parameters, such as air quality and visibility, also enter the production function as arguments. Given a set of assumptions, it is possible to recover the value the household places on a public good (environmental quality) from market data. For an excellent review of the household production function approach, the reader is referred to Smith (1991).
I am grateful for useful comments by an anonymous referee, colleagues of the ESF task force group on valuation, risk and uncertainty, and seminar participants at the University of Uppsala.
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© 1994 Springer Science+Business Media Dordrecht
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Johansson, PO. (1994). Valuing Changes in Health: A Production Function Approach. In: Pethig, R. (eds) Valuing the Environment: Methodological and Measurement Issues. Environment, Science and Society, vol 2. Springer, Dordrecht. https://doi.org/10.1007/978-94-015-8317-6_6
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DOI: https://doi.org/10.1007/978-94-015-8317-6_6
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