On the Use of Subjective Well-Being Data for Environmental Valuation

Abstract

This paper explores the potential of using subjective well-being (SWB) data to value environmental attributes. A theoretical framework compares this method, also known as the lifesatisfaction approach, with the standard hedonic pricing approach, identifying their similarities and differences. As a corollary, we show how SWB data can be used to test for the equilibrium condition implicit in the hedonic approach (i.e., equality of utility across locations). Results for Ireland show that the equilibrium condition required by the hedonic pricing approach in Irish markets does not hold. They also show that air quality, in the baseline specification, and warmer climate, across all the specifications, have a significant positive impact on SWB. Their associated monetary estimates, however, seem too large.

Sowing the Wind and Reaping the Whirlwind? The Effect of Wind Turbines on Residential Well-Being

“…In fact, this introduces measurement error as satisfaction with life is a discrete variable, which is censored from above and from below. However, the bias resulting from this measurement error has been found to be minor in practice (see, for example, Ferrer-i-Carbonell and Frijters (2004) for panel data and Brereton et al (2008) and Ferreira and Moro (2010) for repeated cross-section data).…”

Special Issue 4 : 2016

“…The effects of precipitation, wind speed, rainy days and hours of sunshine on SWB can be different based on the study area. For instance, wind has negative effect on SWB in Ireland (Moro et al, 2008;Ferreira and Moro, 2010). Welsch (2002; found a negative relationship between SWB and air pollution factors at country level.…”

“…Diener et al (2009) and Moro et al (2008) found that people (based on the subjective well-being) who are living proximity to the coastline are happier. Ferreira & Moro (2010) mentioned that coastline is not significant factor for happiness if the distance is more than 5 km.…”

“…Similarly, Rehdanz andMaddison (2005, 2008) found a relationship between SWB and perceived of participants regarding air pollution level (higher perceived pollution level, lower SWB). There are considerable studies regarding the negative effects of air pollution on SWB and happiness at country level (e.g., Ferreira and Moro, 2010;MacKerron and Mourato, 2009;Levinson, 2009). This factor also can be used at the city level.…”

“…Water pollution can increase people worries regarding drinking water in their house, health problems and losing natural resources such as green and open space. Therefore, water pollution is another environmental factors that have direct negative effect on individuals' well-being, life satisfaction and happiness (Israel and Levinson, 2003;Ferreira and Moro, 2010). Van Praag and Baarsma (2005) focused on noise pollution and examined aircraft noise near airport in Amsterdam.…”