Cautionary Note on Computing Site-Specific Recreational Demand Elasticities and Welfare Estimates

This cautionary note achieves three important integrative goals. First is justifying the need for applied agricultural and resource economists to increasingly use flexible modeling techniques, such as the Box-Cox power family of transformations model, for reducing specification bias in recreational demand estimation. Second is demonstrating that findings from fitting inflexible functional form models tend to generate incorrect public policies on consumer welfare estimates. Third is establishing the importance of evaluating the demand elasticity estimates not only at the mean data values but also at the different data points, including at extreme data values, in the observed data space.