Using Choice Modeling to Investigate Equity Preferences

Benefit cost analysis (BCA) is a widely used method of assessing environmental policies. One of the limitations of BCA is the incorporation of equity considerations into an analysis. While this is theoretically possible through the application of distributional weights, this practice has not been generally adopted due to difficulties in determining appropriate weights. This paper suggests that one way of addressing the equity issue is through the application of a stated preference technique to the estimation of equity preferences. It is demonstrated that using choice modelling enables respondents’ equity preferences to be elicited and distributional weights suitable for application in BCA to be estimated.