A Choice Modelling Approach
Chapter 6: Choice Modelling and Distributional Preferences: Challenges and Opportunities
6.0 INTRODUCTION The case study presented in Chapters 4 and 5 has shown that choice modelling has the potential to be applied as a method for eliciting distributional preferences. This finding has important implications for the refinement of CBA as a decision-making tool both in environmental contexts and the broader policy sense. The policy implications of the results are in terms of intergenerational equity and the application of distributional weights in CBA. They raise a number of contentious issues which are discussed in this chapter. The subsequent discussion surrounds the efficacy, complications and limitations of incorporating distribution in decision-making. Hence, this chapter focuses on the challenges and opportunities associated with the application of the stated preference technique of choice modelling to the estimation of distributional preferences. The need for further research to enhance our understanding of distributional preferences is also addressed. The findings suggest many interesting, challenging and exciting potential developments for further research. 6.1 DISTRIBUTION AND CBA Even if distributional preferences can be estimated, three central questions remain about the application of distributional weights in CBA. First, there is the appropriateness of including equity considerations in CBA, particularly given the inherent efficiency cost. Second, there is a problem about the aggregation of social welfare preferences, given that this requires a decision about whose social welfare preferences should be incorporated in an analysis. And third, determining the characteristic, or combination of characteristics, of the population upon which distributional preferences are to be estimated must also be addressed. Although income distribution...
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