Notes
Some Problems in Estimating the Demand for
Outdoor Recreation
Kenneth E. McConnell
Increased pressures to provide realistic, empirical
measures of value for outdoor recreation have gen-
erated considerable research dealing with the de-
mand for outdoor recreation. The thrust of this
research is to provide nonmarket measures of the
value of recreational facilities which are compara-
ble to market values for competing activities. Mea-
surement of the value of recreational facilities has
been beset by data shortcomings and theoretical
problems, and, as indicated in an article by J. A.
Sinden recently published in this Journal, some of
the perennial research problems remain.
The purpose of this paper is to derive recreation
demand functions consistent with utility maximiza-
tion to address specific issues in empirical research.
Outdoor recreation demand functions are used to
make inferences about the consumers' surplus and,
implicitly, about the social welfare derived from
particular sites. Hence, it is important that the em-
pirical research be as consistent as is feasible with
the theoretical structure from which the concept of
consumers' surplus is derived. In discussing the
relationship between recreation demand functions
and consumers' surplus, Cesario and Knetschstate
that' 'whereas the assumptions of constant margi-
nal utility of income over the relevant range and
utility maximization are necessary, ... they gener-
ally do not pose particular practical difficulties" (p.
700). This paper will demonstrate explicitly the
practical difficulties implied by the assumptions of
utility maximization.
This paper considers three specific issues in out-
door recreation demand: (a) the appropriate mea-
sure of the value of time as a cost of participating in
outdoor recreation, (b) the logical units of mea-
surement for a recreation activity when estimating
demand functions via the travel cost method, and
(c) the appropriate functional form of the outdoor
recreation demand function, particularly the rela-
tionship between the price and income variables.
The Value of Time in the Demand for
Outdoor Recreation
Since the work of Cesario and Knetsch, it has been
widely accepted that the time required in traveling
Kenneth E. McConnell is an assistant professor in the Depart-
ment of Resource Economics at the University of Rhode Island.
Contribution Number 1590 of the Rhode Island Agricultural
Experiment Station. R. Cummings, V. Duff, two anonymous
reviewers, and the editor have contributed helpful comments.
330
to the recreation site is as important a cost variable
as the travel cost itself in determining the quantities
demanded of outdoor recreation. As Brown and
Nawas state, "Given the importance of increased
distance on the negative factors of travel time and
alternative recreational opportunities, the inclusion
of a separate variable, such as travel time per dis-
tance zone, would appear to be needed" (p. 24).1
The purpose of this section is to demonstrate that,
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for estimating demand functions consistent with
utility maximization, the researcher should con-
sider not simply the time in transit but the total time
required for completing the recreation activity. The
model developed here is not meant to describe real-
ity completely. It abstracts from many important
determinants of the demand for recreation in order
to analyze the impact of the constraint on time. For
this approach to be useful, recreationists must act
as if they are constrained by the time available for
them to recreate.
We begin with a simple statement of the general
problem. Suppose the consumer chooses among n
recreation activities, rj, j = 1, ... , n, and a compos-
ite bundle of goods, x, so as to maximize the utility
from the consumption of goods and recreation per
unit of time. The consumer's choices are con-
strained by his income and the total time available
to him. Let Utx , r) be the utility indicator with r
denoting an n-dimensional vector.
We will examine the case where the consumer
can choose the amount of time he works and also
the case where the time at work is fixed. Let w
represent the amount of time worked. To include
both work and recreation in the same time con-
straint, they must be converted to the same units.
The quantity variable for the recreation activity, r.,
is measured in the number of trips of a specified
length. Let aj represent the number of units of time
required to participate in one unit of rj. Hence, a.r,
is the total time required to consume rj trips of
outdoor recreation activity.
When the consumer can choose the amount of
time to work, the time constraint is
n
(I) L a.r, + w = T,
j=1
where T is the total time available. If the consumer
1 The work of Gary Becker suggests that the total time spent in
an activity is the appropriate measure of the opportunity cost of
time. Empirical work in recreation, to my knowledge, has been
limited to measuring the opportunity cost of travel time only.
 McConnell
cannot choose the amount of time he works, then
the time constraint is
n time
(2) Ij=l
a.r, = T*,
where T* is the fixed amount of recreation time
available. In each constraint, a, is the amount of
time required for one unit of rj. For example, sup-
pose that T is measured in days. If rj is the number
of day visits to the beach, a, = 1. If rk is the number
of three-day camping trips, ak = 3.
The consumer must spend within the constraints
implied by the equation,
(3) F(w) = px + !
j=l
Cjrj,
where p is the price of the composite good, C j is the
net variable costs, including travel and transfer
costs, of the jth activity, and F(w) is the income
generated by working w units of time. Solving equa-
tion (1) for time worked and substituting in equation
(3), we can write the constrained maximand,
n tion time. Then the demand for outdoor recreation
(4) U(x, r) - X(px + I Cjrj
j=l
- F(T -
,where the consumer chooses the quantities of
recreation activities and the composite good.
Maximizing equation (4) with respect to rj yields
(5) aUlarj = X(Cj + ajF'(w»,
where c, is the travel and transfer cost of a trip,
F'(w) is the marginal earnings ofa unit of work, and
a, is the number of units of work that the consumer
must forego in order to enjoy one trip of recreation
activity, rj. Hence, a.F'tw) is the earnings foregone
by enjoying a trip of recreation activity, r.. It is the
earnings over the whole recreation period, as indi-
cated by a., the number of periods of work required
by the recreation trip and not just the time in tran-
sit. The important conclusion is that the cost of
consuming a unit (trip) of an outdoor recreation
activity is the sum of travel costs and the value of
earnings foregone over the entire trip.
Suppose that the recreationist maximizes utility
subject to a fixed amount of recreation time, as
given by equation (2), and a fixed income, denoted
by y. Instead of equation (4), the maximand will be
(6) U(x, r) - X(x . p + !
j=l
Cjrj - y)
The first order condition with respect to rj is
(7) aUlarj = XCj + JUlj.
The multiplier, /-L, is the marginal utility of
recreation time. Let us define a variable mr such
Estimating Recreation Demand 331
that m» /-LIX. Here m- has the dimensions
~u~ility / ~~tility or (f1incomeldtime). It fol-
Income
lows that mT can be interpreted as the opportunity
cost of scarce recreation time, measured in dollars
of income. It is the equilibrium value of an addi-
tional unit of recreation time in any recreational
activity. Equation (7) can be written
(8) aUlarj = X(cj + ajmr).
It is useful to compare equation (8) with equation
(5). According to equation (8), the cost of a unit of
thejth recreation activity is travel costs (Cj) plus the
scarcity value of time (ajfflT) in income. It is impor-
tant to note that even in the case where the con-
sumer foregoes zero earnings, he still considers the
scarcity value of time as part of the cost of the
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recreation activity because the time could have
been used in other recreational activities.
The implications of this section can be stated in a
general way. Let m» be the marginal monetary
value of an extra unit of time, be it earnings, F'(w),
or simply the dollar value of an extra unit of recrea-
can be written
n
(9) rj = Jj(Cj + ajmT, y).
I
j=l
ajrj» , Here y is money income and c, + ajmT is the unit
cost of the experience, where the unit is a trip.
Because ajmr is included in the measure of unit
costs, it is clear that understanding the opportunity
cost of total time is important for accurate mea-
sures of the economic value of outdoor recreation.
Equation (9) has important implications for em-
pirical research in outdoor recreation. With regard
to survey questionnaires, it suggests the following
questions.
(a) Could the recreationists have worked for pay
during the period of the recreation visit?
i) If no, proceed to question (b); F'(w) = O.
ii) If yes, how much could have been
earned?
(b) What might the recreationist have done if not
on this trip?
i) If nothing, then /-L = 0 and mr = O.
ii) If something, attempt to determine wil-
lingness to pay for second most favorable
activity.
Significant responses to this series of questions
would indicate that recreationists act as if their time
were scarce. However, it is possible to obtain zero
value for the opportunity cost of time for some
people (i.e., m- = 0), because it is probable that a
zero value for mr indicates some persons have no
alternative source of earnings and will not use the
time for other recreation activities.
Equation (9) also has important implications for
the specification of the demand function. The tradi-
tional approach has been to estimate the parame-
ters of the function:
(10) number of trips
= f(travel costs, income, distance).
332 May 1975
The distance variable in equation (10) has been
used as a proxy for time in transit. Equation (10)
has been difficult to estimate satisfactorily, how-
ever, because travel and transfer costs are often
almost a linear transformation of distance. The re-
sults of this section suggest that the researcher
should make estimates of the value of total time
consumed on the recreation trip, add this value to
the travel and transfer costs incurred, and estimate
the parameters of the relation. A distance variable
can be included in equation (9) to account for the
different relative travel costs of substitutes faced by
recreationists from different distance zones and to
allow for the filtering affect of distance on informa-
tion about a site. We can now write:
(II) number of trips
= f(travel costs + time costs, income, distance).
It should be observed that the distance variable in
equation (II) has a substantially different interpre-
tation from distance in equation (10).
We can conclude from this analysis that using the
travel cost method on a given set of observations,
while ignoring the opportunity cost of time, under-
estimates the marginal value of the recreation.
Something can also be said about the estimates of
the consumers' surplus when equation (10) rather
than equation (II) is estimated. Suppose the model
estimated is r = Clbl + Db 2 + vb«. when the true
relationship is r = (Cl + C2){31 + D{32 + y{33 + u ,
where C 1 = travel costs, C2 = time costs, D =
distance, r = recreation trips, y = income, u =
random variable, b, = least-squares estimators of
{3r{3j = true coefficients. Under fairly reasonable
assumptions, it can be shown that Eb 1 < {31. 2
Thus, on the average, the slope of the quantity of
recreation consumed with respect to the pricevari-
able is underestimated when the opportunity cost of
total time is ignored.
For the linear per capita demand function, un-
derestimating the slope with respect to the price
variable results in an underestimate of consumers'
surplus." Hence, we can infer that a demand curve
derived from the travel cost method which ignores
the opportunity cost of time will result in a down-
ward biased estimate of the consumers' surplus
2 The bias from omitting C2 is a form of specification bias. (See
Ramsey.) It can be shown that PI - Eb, = -[j3I/oo2] (covtc., C2)
var b i + cov(D, C2) cov(bl> b2 ) + cov(y, C2) cov(b l , ba», where 002
is the variance of the error term. A priori income and time costs
are likely to be highly correlated, while there is no reason to
believe that COV(CI, C2) and COV(C2, D) are non-negative. If these
relations hold, the bias will be positive. If everyone's time is
valued the same, C2 is a constant and the coefficients are not
biased. If the correct specification is nonlinear as implied in a
subsequent section, the importance of the bias from a linear model
is reduced.
a If Eb, < PI> then lIPI < lIEb l • Since lIPI is the slope of the
demand curve with the price on the vertical axis, quantity on the
horizontal axis, and lIEb l its estimator, we can say that the true
curve is more inelastic than the estimated curve. Consumers'
surplus is derived by raising the price from zero until quantity
becomes zero. Both curves begin at the same point on the quantity
axis because the quantity taken at a zero price is known. Hence,
the more inelastic curve yields the greater consumers' surplus.
Amer. J. Agr. Econ.
from the site. For models of other functional forms
(i.e., nonlinear), it is not possible to determine, on
an a priori basis, the effect of the omission of the
opportunity cost of time on the estimated slope of
the demand function and the value of consumers'
surplus.
The importance of this section is that it suggests
that the recreationist may consider the cost of the
total time spent on the recreation activity as part of
the cost. This conclusion is at variance with the
accepted role of time cost in a recreation activity,
which has been limited to the cost of time in travel-
ing to the site. The inclusion of the additional value
of time changes the structure of the estimating
equation as well as the nature of the information to
be gathered by the researcher.
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Units of Measurement for the Travel Cost Method
Researchers in the field of recreation economics
have used several quantity measures in estimating
travel cost demand functions. The most common
units are trips, user-days, and user-hours. For
example, in Sinden's work, the quantity of outdoor
recreation demanded is "the number of hours
of a specific recreation activity . . . per family
member during the 12 months prior to the inter-
view" (p. 62). For Burt and Brewer, "quantities of
outdoor recreation services are measured in units
of visitor days" (p. 826). Knetsch uses number of
visits.
Basically, the two measures of recreation de-
manded are trips and user-days, user-days being
merely a linear transformation of user-hours." De-
riving the demand functions from a utility maximi-
zation framework demonstrates that user-days are
not an appropriate measure for the quantity of
recreation demanded when using the travel cost
method.
Utility maximization implies that
(12) .:lutility/.:lquantity
(.:lcosts)
= marginal utility of income
(.:lquantity) .
Researchers implicitly use a first-order condition
like equation (12) to solve for quantity as a function
of marginal costs. It is clear, however, that in many
cases the marginal cost of a user-day is independent
of the level of travel costs, so that specifying the
demand for user-days as a function of travel costs
has no basis in theory.
A simple example will illustrate the difficulties of
analyzing user-days with the travel cost technique.
The costs of recreating can be divided into fixed
costs per trip (travel costs) and net variable costs
4 The variable user-days here is meant to include not only days
on the site but also days consumed getting to the site. Researchers
have not been consistent in this respect. Burt and Brewer include
time consumed in reaching the site in their analysis of user-days
whereas Sinden's measure of user-hours includes only time at the
site.
McConnell
per user-day times the quantity of user-days. Sup-
pose that, for a particular recreationist, fixed costs
per trip are $10 and net variable costs per day are
$5. It seems clear that the recreationist will adjust
his user-days in such a way that the marginal value
of a user-day is $5, as long as total conditions are
satisfied. The marginal cost of a user-day is inde-
pendent of the travel costs, once the recreationist
has undertaken the trip. Hence, to be consistent
with utility maximization, the demand for user-days
should be estimated as a function of net variable
cost per day including time costs.
The inconsistency of user-days with the travel
cost method would not be a matter of concern if
researchers did not use the resulting functions to
derive measures of consumers' surplus. The com-
putation of consumers' surplus requires knowledge
of the per capita demand functions. The demand
function is essentially a relationship between per
unit cost and quantity demanded. The relationship
between travel costs and user-days cannot truly be
called a demand curve, even though it is possible to
estimate such a relationship statistically. 5
It is difficult to determine on an a priori basis
what impact the inconsistency between user-day
and the travel cost method would have on estimates
of consumers' surplus because it is questionable
whether the quantity estimated is really consumers'
surplus. It seems likely that the more meaningful
relationship between trips and travel costs is more
inelastic than the relationship between user-days
and travel costs because recreationists from the
further distance zones are likely to reduce their trip
numbers and expand their user-days per trip.
User-days are clearly important for many pur-
poses. The capacity of a recreation site is best
defined in terms of user-days per day. If one had
good observations on net variable costs per day,
including time costs which vary for individuals, it
might be possible to estimate the demand for user-
days.
The results of this section imply that the trip or
visit is the most logical measure of quantity con-
sumed in the travel cost method of estimating the
demand for recreation. Analysis with user-hours or
user-days may be appropriate in many cases. How-
ever, it does not appear logically correct to make
inferences about consumers' surplus under the as-
sumption that travel costs are the marginal costs of
a user-day or a user-hour.
A Priori Specification of Outdoor Recreation
Demand Functions
Since David Seckler originally raised the issue,
there has been considerable discussion about the
5 The relationship can be estimated statistically because raising
travel costs reduces the number of trips. With fewer trips, the
number of user-days declines also because recreation time for
most people occurs only with days off from work, weekends, and
vacations.
Estimating Recreation Demand 333
impact of income changes on the demand for out-
door recreation. An issue recently addressed by J.
A. Sinden concerns the independence of the price
and income slopes in the estimation of the demand
model. Sinden compares the estimation of the fol-
lowing equations:
(13)
and
(14) r, = f30 + f31Cj for each income group.
Here rj is the number of visits, y is income, and c,
is a measure of costs, including time costs, of a
visit. Referring to formulations exactly analogous
to equations (13) and (14), Sinden states, "Despite
a review of pertinent literature, no a priori reason-
ing could be developed to suggest that one equation
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would be more relevant than the other" (p. 65). If
one assumes that outdoor recreation demand func-
tions have been derived from utility maximization,
a considerable amount can be said about the a priori
specification of the demand functions.
The specific issue addressed by Sinden concerns
the influence of income on the slope of the demand
for recreation with respect to the price. This
influence depends upon the functional form as-
sumed. Since estimates of consumers' surplus vary
greatly with the functional form of the demand
curve, the issue is of more than passing interest.
The difference between Sinden's specifications,
given by equations (13) and (14) above, is that for
equation (13), the price slope is independent of the
level of income (i.e., a2r)ac jay = 0). For equation
(14), the price slope depends upon the level of in-
come (a2r jlacjay =J 0). Equation (13) is a special case
of equation (14).
If one derives the income slope in a utility
maximizing framework, it can be shown that
n
(15) arjlay =.I
k=l
Ujk-lCklc'U-lC,
where U jk- 1 are the elements of U- 1, the inverse of
the matrix of the second-order derivatives of the
utility functions, and C is the vector of all costs and
prices faced by the recreationist. 6 It is clear from
equation (15) that the income slope depends upon
the costs (c) for all specifications of the utility func-
tion. Hence, a2rjlacjay =J 0 and by the symmetry of
6 Assume that CJ includes the travel and transfer costs and time
costs per unit of thejth activity and that those costs are constant.
For simplicity of notation, we can drop the composite good, x ,
from the analysis. Then differentiating the first-order conditions,
equation (5), with respect to income gives
f
L... U Jk -
ark
-
ax.
cJ - = 0 j = 1, n
k-l ay iJy
and
or in matrix form, where UJk is the matrix of second-order partials
 334 May 1975
cross partials, a2rj/ayacj I- O. The price slope de-
pends upon the level of income. We may conclude
that the more general specification, equation (14), is
more in keeping with utility maximization. Demand
analysis which has as its goal inferences about con-
sumers' surplus should deal with demand functions
which permit the price slope to vary with the in-
come level.
The attempt to make the functional form of em-
pirical demand functions consistent with utility
maximization has important implications for policy.
First, for any given distribution of income, a differ-
ent functional form for the demand curve implies a
different value for the consumers' surplus. Second,
as Stoevner and Brown pointed out for a particular
case (p. 152), some nonlinear specifications imply
that estimates of consumers' surplus change as the
distribution of income changes. Keeping demand
functions consistent with utility maximization will
give analysts a common point of departure.
In sum, there is a priori reason to specify the
econometric structure of a demand model in such a
way that the price coefficient may vary as income
varies. The a priori specification implied by utility
maximization precludes additive functional forms.
The result is important because it permits analysts
to determine which demand functions are not con-
sistent with utility maximization, instead of assum-
ing consistency in all cases.
This paper has developed an analysis of the de-
mand for outdoor recreation in a utility maximiza-
tion framework for the purpose of analyzing empir-
of the utility function and arjay is the vector of income slopes,
By the rules for inverting a portioned matrix, it can then be shown
that
where A is a matrix occupying the first n by n places of the inverse
and -U-1C(C'U-1C)-1 is a column vector occupying the n + 1
column of the inverse. Solving for any particular ar/iJy yields the
expression given in the text. This result implies that a demand
function of the form r = g(c) + h(y), when gO and h(') are
arbitrary functions, is not consistent with utility maximization.
Amer. J. Agr. Econ.
ical issues of research in outdoor recreation
economics. The three basic conclusions of this
paper are (a) that the appropriate time variable in
the demand for outdoor recreation is the value of
the total time consumed by the recreation activity
rather than simply the time in transit, (b) that the
unit of measurement consistent with the travel cost
method is the trip or visit and not user-days, and (c)
that there is a priori reason to specify the demand
function such that the price slope can change as
income changes.
[Received September 1974; revtston accepted
January 1975.]
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