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2016 | OriginalPaper | Chapter

7. Measurement of Evaluation Rate of Public Pollution (Noise)

Author : Hirotada Kohno

Published in: Economic Effects of Public Investment

Publisher: Springer Japan

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Generally, the more realistic, complicated policy decision-making problems have, the more objectives. For example, the road construction project has the objective to contribute to the effective development of the national economy/regional economy and at the same time to contribute to the preservation of natural environment/living environment, especially recently (hereinafter, depending on [1], [3]).

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previous chapter Social Costs and the Measurement

next chapter Criteria of Benefits Valuation—Remained vs. Transferred, and Generation Base vs. Incidence Base

The permissible range of attribute is not necessary to be the inequality indicated the above. It will be $ {x}_i^w\leqq {x}_i\leqq {x}_i^b $, for the usual ordinary goods, and $ {x}_i^b\leqq {x}_i\leqq {x}_i^w $, for the environmental index.

Lottery is to be “a lot.”

Here, the $ {\overline{x}}_i $ of the conditional utility function $ {U}_i\left({x}_{i,}{\overline{x}}_i\right) $ is to be fixed at a certain value.

What is the certainty equivalent? It is the certain value of x _i which gives the level of utility equivalent to the expected utility of lottery.

$ {k}_iU\left({x}_i^w\right)=0;{k}_jU\left({x_j}^w\right)=0. $

$ E\left[U\left(\tilde{x}\right)\right] $ stands for the expected utility of lottery $ \tilde{x} $.

$ {k}_2{U}_2\left({\overline{x}}_i^w\right)=0;{k}_1{U}_1\left({\overline{x}}_i^w\right)=0 $

The following can be said about the general form of U _i = U _i(x _i). That is, the U _i(x _i) according to $ \widehat{x}{}_{<}{}^{\geqq }p_i{x}_i^b+\left(1-{p}_i\right){x}_i^w $ for p _i(0 ≦ p _i ≦ 1) takes the form of (1) concave function, (2) linear function, and (3) convex function, respectively; they are to be shown in Fig. 7.3.

The expected utility of these two lotteries can be obtained by using the additive utility function and the multiplicative utility function as follows:

A case of additive utility function

$$ E\left[U\left({\tilde{x}}_{ij},{\overline{x}}_{ij}^{\kern0.5em w}\right)\right]=\frac{1}{2}\left({k}_i+{k}_j\right),\ E\left[U\left({\tilde{\tilde{x}}}_{ij},{\overline{x}}_{ij}^{\kern0.5em w}\right)\right]=\frac{1}{2}\left({k}_i+{k}_j\right) $$

A case of multiplicative utility function

$$ E\left[U\left({\tilde{x}}_{ij},{\overline{x}}_{ij}^{\kern0.5em w}\right)\right]=\frac{1}{2}\left({k}_i+{k}_j+k{k}_i{k}_j\right),\ E\left[U\left({\tilde{\tilde{x}}}_{ij},{\overline{x}}_{ij}^{\kern0.5em w}\right)\right]=\frac{1}{2}\left({k}_i+{k}_j\right) $$

Due to k ≠ 0, this identifying method can be understood.

The expanding of equations is as follows:

$$ \begin{array}{c}\frac{1}{2}{\left.\left\{1\right.+kU(x)\right\}}_B+\frac{1}{2}{\left.\left\{1\right.+kU(x)\right\}}_D=\frac{1}{2}\left\{1+k{k}_1{U}_1\left({x}_1^b\right)\right\}\left\{1+k{k}_2{U}_2\left({x}_2^b\right)\right\}\\ {}=\frac{1}{2}\left\{1+k{k}_1\right\}\left\{1+k{k}_2\right\}=\frac{1}{2}\left\{1+k{k}_2+k{k}_1+{k}^2{k}_1{k}_2\right\}\\ {}=\frac{1}{2}\left\{1+k\left({k}_1+{k}_2+k{k}_1{k}_2\right)\right\}\end{array} $$

$$ \frac{1}{2}\left\{1+kU(x)\right\}=\frac{1}{2}\left\{1+k\left({k}_1+{k}_2+k{k}_1{k}_2\right)\right\} $$

$$ \therefore \kern0.5em \frac{1}{2}U(x)=\frac{1}{2}\left({k}_1+{k}_2+k{k}_1{k}_2\right). $$

On an earlier occasion, the questionnaire sheets of five attributes, i.e., X ₁ = monthly income, X ₂ = monthly residential expenditures, X ₃ = monthly living expenditures, X ₄ = commuting time, and X ₅ = noise, have been made, for the pair of which the utility independent is verified, but preferentially independent was not verified.

Keeney, Ralf L. 1974. Multiplicative utility functions. Operations Research 22: 22–34.CrossRef

Yoshida, Masatoshi (Translated). 1977. Tazokusei kōyō kansu (Multiplicative utility functions). Expressways and Automobiles 20(6): 58–66.

Keeney, Ralf L. 1972. Utility functions for multiattributed consequences. Management Sciences 18: 276–287.CrossRef

Keeney, Ralf L. 1975. Energy policy and value tradeoffs. IIASA research memorandum, RM-75-076, 1–68. Laxenbarg, Austria.

Nair, Keshavan, and Ralf L. Keeney. 1975. Selecting nuclear power plants sites using decision analysis. San Francisco: Woodwarde-Clyde Consultants.

Keeney, Ralf L. 1973. A decision analysis with multiple objectives: The Mexico City Airport. The Bell Journal of Economics and Management Science 4(1): 101–117.CrossRef

Keeney, R.L., and Eric F. Wood. 1977. An illustrative example of the use of multiattribute utility theory for water resource planning. Water Resources Research 13(4): 705–712.CrossRef

de Neufville, Richard, and R.L. Keeney. 1972. Chapter 23: Use of decision analysis in airport development for Mexico City. In Analysis of public systems, ed. A.W. Drake, R.L. Keeney, and P.M. Morse, 497–519. Cambridge, MA/London: The MIT Press.

Kohno, Hirotada, Yoshiro Higano, and M. Yoshida. 1977. Measurement of evaluation rate of public pollution using the multi-attributed utility function. In Studies in regional science, The 13th (s.51) annual meeting report, vol. 7, 225–245. Tokyo: Japan Regional Science Association.

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Kohno, H., Tetsuo Ogawa, and M. Yoshida. 1979. Social costs and the evaluation rate of public pollution – Based on indirect utility function and expenditure function. In Studies in regional science, The 15th (s.54) annual meeting report, vol. 9, 59–75. Tokyo: Japan Regional Science Association.

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Kohno, H., T. Ogawa, M. Kawase, and M. Yoshida. 1978. Theory and measurement of the evaluation rate of public pollution—first last. Expressways and Automobiles 21(8): 22–26 & 21(9): 23–28.

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Social costs research committee on metropolitan express highway (ed.). 1977. Measuring research of social costs on metropolitan express highway. Tokyo: Foundation Metropolitan Express Highway Society.

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Seo, Fumiko. 1973. Optimization of multi-objective problem and the regional environmental assessment. The Bell Journal of Economics and Management Science 4(1): 95–111.

Title: Measurement of Evaluation Rate of Public Pollution (Noise)
Author: Hirotada Kohno
Publisher: Springer Japan
Book: Economic Effects of Public Investment
Print ISBN: 978-4-431-55223-9

Electronic ISBN: 978-4-431-55224-6

Copyright Year: 2016
DOI: https://doi.org/10.1007/978-4-431-55224-6_7

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