New Horizons in Environmental Economics series
Page 192 9— Developing and Maintaining Expertise So far in this manual, we have dealt with TCM as a decisionsupport tool, given a brief outline of its history and examined necessarily succinctly the economic theory underlying the methodology. We have devoted several chapters to the design and management of various processes necessary for the successful completion of analyses. We have now arrived near to the end of the story. The frontier of knowledge is continually being expanded. In order to assist you to keep up with new developments and build your expertise, this chapter first discusses criteria for a good model and examines current scholarly debates: It then examines some new approaches and notes the most relevant journals where you will find papers published on new developments. Criteria for a Good Model Like other econometric models, a good TCM should be based on theories of economic behavior, it should be policyrelevant and it should fit the data on observed behavior. Success in getting closer to at least one of these ideals is the standard we commonly use to evaluate the contribution of new TCM research. Consistency with Choice Theory Theory is especially important for TCM since the CV and EV welfare measures are not directly measurable. Thus, it is difficult to identify errors in logic such as incorrect variables or functions by confronting them with the data. The theory of consumer choice lets us derive the CV and EV from observed behavior but only if the empirical demand...
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