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Econometric estimation of deprivation cost functions: A contingent valuation experiment
Author(s) -
HolguínVeras José,
AmayaLeal Johanna,
Cantillo Victor,
Van Wassenhove Luk N.,
ArosVera Felipe,
Jaller Miguel
Publication year - 2016
Publication title -
journal of operations management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 3.649
H-Index - 191
eISSN - 1873-1317
pISSN - 0272-6963
DOI - 10.1016/j.jom.2016.05.008
Subject(s) - valuation (finance) , econometrics , proxy (statistics) , contingent valuation , estimation , economics , metric (unit) , cost estimate , logistic regression , actuarial science , computer science , willingness to pay , operations management , statistics , microeconomics , mathematics , finance , management
This paper details research to design an estimation process for Deprivation Cost Functions (DCF) using Contingent Valuation, and to apply it econometrically to obtain a DCF for drinkable water. The paper describes both the process and results obtained. The results indicate that deprivation costs for drinkable water have a non‐linear relation with deprivation times. The estimated DCFs provide a consistent metric that could be incorporated into humanitarian logistic mathematical models, eliminating the need to use proxy metrics, and providing a better way to assess the impacts of delivery options and actions. The research reported in this paper is the first attempt in the literature to produce estimates of the economic value of human suffering created by the deprivation of a critical supply or service.