RECONSIDERING THE USE OF HICKS NEUTRALITY TO RECOVER TOTAL VALUE

In this paper, I reconsider the use of Hicks neutrality for recovering total value for a change in an environmental good. I clarify the need to adjust expenditures and explain how numerical techniques can be us ed in approximating these adjustments. I show that the circumstance be lieved to support Hicks neutrality, weak neutrality at the choke price vector, is a case of weak complementarity. I mathematically demonstra te that the necessary degree of Hicks neutrality is unlikely to be sat isfied. I derive the ensuing relative bias and show its usefulness in selecting goods which may approach Hicks neutrality. (C) 1996 Academic Press, Inc.