Balanced Value Impact Model

Revealed preference methods

Revealed preference methods are based on an analysis of what people actually do in real-world situations rather than them making choices or valuations in hypothetical situations. Some resources/products (even if not traded) are related in consumption to goods that are traded. This relationship is known as revealed preference and can be used to estimate use-values.

The two main categories of revealed preference methods are hedonic pricing and travel cost.

Hedonic pricing is rarely used in the cultural sector. It is used to determine the extent that environmental or ecosystem factors affect the price of a good - usually a home – via variables such as the nature of the property, its location and inhabitants.

Travel cost estimates the amount of time that people are prepared to travel to consume goods or services. The travel cost method is typically used to value the benefits of recreation trips and sites, among other things. It begins by assuming that the travel and time cost is the implicit price of a recreation trip. The benefit of recreation sites is equal to the consumer surplus. The benefit of recreation trips is equal to the consumer surplus for the site divided by the number of trips.

How travel cost methods work with digital is to make a comparison between travel costs previously incurred versus additional services availed digitally that remove the need to travel.

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