4 - Consumer Surplus with Apology

Summary

Benefit-cost practitioners in the mid twentieth century, forced by government agencies to value outdoor recreation, continued to struggle with how to do so. One outside expert, Harold Hotelling, recommended what became known as the travel cost model. This approach measures the demand for recreation based on how much people are willing to pay for a trip in terms of travel costs. It also measures the value of a trip in terms of consumer surplus, or the additional value recreationists have above the travel costs they pay. Although the method eventually became stardardized, it initially was received with skepticism and confusion. Consumer surplus was an archaic, theoretical construct with little grounding in realty. This chapter discusses how economists like Marion Clawson and Jack Knetsch overcame their skepticism.