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Friday, July 30, 2010
How much is the Statue of Liberty worth?
Seth asks of the Lincoln Memorial:
irst sometimes economists use travel costs as a way to proxy for value. If someone spends $500 to visit the Grand Canyon, then we might say the Grand Canyon is worth $500 to them. One way to figure out the value of a place is to add up the value of all the trips people took to visit it. If something is free like the Lincoln Memorial you might ask people how much they would pay to visit it. You might also ask how much would you pay to keep the Lincoln Memorial. For example I might never again visit the Wailing Wall in Jerusalem, but I might be willing to donate $5 to save it. Surveying people about their value of how much they would pay to visit or protect something to estimate its value is called contingent valuation.
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Robert Solow “it makes perfectly good sense to insist that certain unique and irreplaceable assets should be preserved for their own sake; nearly everyone would feel that way about Yosemite or, for that matter, about the Lincoln Memorial, I imagine”
Everything (and everyone) has its price. The way I would think about it is like with ballplayers or draft lists: rank them from most irreplaceable to easiest to replace. Let’s say the Statue of Liberty is #1, and the Lincoln Memorial is #2, and Central Park is #3, all the way to the bottom (say the Howard Stern rest-stop on the Turnpike). How much is #1 worth? Maybe as much as #2 and #10? How much is #2 worth? Maybe as much as #3 and #20? And so on. How much are ALL of them worth? Say each working adult would be willing to donate 1000$ a year to preserve the historical monuments (so, say about 100 billion dollars).
Let’s say you’ve identified 10,000 objects subject to preservation. You put the #1 item as worth 100 million dollars to preserve. And every item below that as 0.1% less (.999 of the value of the one above it). Given 10,000 such objects, the last place one is worth 4500$, and the sum of all these objects is 100 billion$. Is that a reasonable way to approximate it?
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