A Whale of a Good Time:
Exploring Flexibility in the Recreation Demand Model
Sabina L Shaikh*
Prepared for the American Agricultural Economics Association Annual Meeting.
Salt Lake City, Utah. August 1998.
*Graduate Student Department of Agricultural and Resource Economics, University of California,
Davis, CA 95616. Phone: (530) 754-8173 Email: firstname.lastname@example.org
A Whale of a Good Time: Exploring Flexibility in the Recreation Demand Model
This research seeks to produce more robust, less biased estimates from the two-constraint
recreation demand model by applying globally flexible estimation techniques to travel cost data for
California whale watching trips. While locally flexible functional forms do improve upon
previously used restrictive forms imposed for estimation of travel cost models, specification errors
occur unless the chosen form happens to coincide with the true unknown underlying form. A
globally flexible functional form can consistently approximate the true function and its derivatives
for all points in the sample range. This paper seeks to reduce specification error and improve
accuracy of estimates from the two-constraint recreation demand model by using a globally
flexible functional form.
The empirical model is based on a construction by Chalfant (1987), which combines
Deaton and Muellbauer’s AIDS model with the Fourier flexible form of Gallant. The resulting
functional form preserves the aggregation properties of the PIGLOG class of preferences while
approximating the true function within an arbitrary degree of precision. A comparison of model
estimation results shows that the locally flexible AIDS model results in specification error. Further
research of an extension of the model, which combines travel cost data with contingent valuation
responses to hypothetical population enhancements, is briefly discussed.
Traditional demand analysis tools do not necessarily generalize to the case of recreation demand
due to the lack of observable market and price signals asso