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Module 4302
Consumer Economics 2: Theory and Application for Valuing Non-Market Goods

Instructor

Prof. Xiaohua YU Ph.D., University of Göttingen
Email: xyu@gwdg.de; Tel: 0551-3919574, Office: 10.121

Lecture Room: Due to the coronavirus crisis, this course will be offered online by ZOOM if the classes do not return to normal.

Lecture Time: 9:00 am, 10 Aug. 2020 – 12:30 am, 14 Aug. 2020

Prerequisite courses: Introductory econometrics and Stata Software

Course Description

The techniques of valuating non-market goods are widely used for agribusiness and environmental economics. This course is designed for graduate-level students at the University of Goettingen and some other related universities, and helps understand the fundamental economic theory of non-market goods and master basic econometric techniques for applications.
This course includes three parts:
Part I introduces the basic theory;
Part II introduces the econometric techniques; and
Part III is practice with the real data.

Course Outline

  1. Introduction

    Part I: Basic Theory

  2. Measurements of Welfare Changes
    • Individual Preferences and Demand
    • Welfare Measures for Changes in Prices
    • Welfare Measures for Changes in Factor Prices
    • Welfare Measures for Quantity Changes
    • Aggregation and Social Welfare
  3. Revealed Preference Models of Valuation
    • Environmental Quality as a Factor Input
    • Individual Demand for Environmental Quality
    • The Structure of Preference: Complements or Substitutes
    • Discrete Choice Models and Measures of Values
  4. Stated Preference Models of Valuation
    • Welfare Economics of Stated Preference Questions
    • Validity of Stated Preference Welfare Measure
    • Psychological Fundament of Stated Preferences
  5. Values under uncertainty
    • Individual Preferences and Expected Utility
    • Aggregation and the Welfare Criterion
    • Revealed Preference Methods under Uncertainty

    Part II: Methods and Econometric Techniques

  6. Econometrics of Limited Dependent Variables
    • MLE
    • Maximum Simulated Likelihood
    • Probit and Logit
    • Tobit, Cragg Model, and Heckman Model
  7. Contingent Valuation Methods (CVM)
    • Continuous Methods: Open-Ended and Payment Cards
    • Discrete methods: Single-Bounded and Double Bounded
  8. Choice Experiments (CE)
    • Experiment Design
    • Econometric Estimation
  9. Experimental Auction
    • Auction Design
    • WTP Estimation
  10. Hedonic Techniques
    • Basic Theory
    • Model Specification and Estimation
    • Measurement of Welfare Changes

    Part III: Practice

  11. Lab Sessions

Teaching Method: Lectures + Lab Sessions

Language: English

Credits: 3

Grades: Participation and Exam

Readings and References