Consumer Surplus with Apology : A Historical Perspective on Non-Market Valuation and Recreation Demand

When economists turned to applied benefit-cost analysis in the 1930s and 1940s, they adopted prices as indicators of benefits. This was consistent with both neoclassical economics (in which prices are marginal values) and institutional economics (which favored a plausible market mechanism to collect the revenue). Perhaps surprisingly, measures like consumer surplus were not considered, and indeed seemed foreign. Thus, as natural resource economists turned to problems of non-market valuation, the demand curves they constructed, being only one side of the market, seemed less informative than prices. As they struggled with how to make use of such information, natural resource economists set important precedents for the larger profession in coming to consumer surplus as a new indicator of benefits. This paper tells that history, focusing on applications to outdoor recreation