Hedonic pricing
RICS Insight Paper ‘Value of natural capital - the need for chartered surveyors’ published by the Royal Institution of Chartered Surveyors in 2017, describes hedonic pricing as a revealed preference method of valuation that draws on the revealed preferences of stakeholders.
In hedonic pricing: 'property transaction data are analysed to determine the influence of the factor being valued, for example proximity to open space or location in a National Park. This relies on having sufficient data to produce a robust analysis.'
Other revealed preference methods include:
- Travel cost methods.
- Avertive expenditure (or avertive behaviour methods).
- Replacement cost.
- Direct market valuation.
Approaches other than the revealed preference method include:
- Stated preference valuation.
- Value transfer/benefit transfer.
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