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Summarizing the effect of a wide array of amenity measures into simple components: Working paper series--05-05

Gunderson, Ronald and Ng, Pin (2005) Summarizing the effect of a wide array of amenity measures into simple components: Working paper series--05-05. Working Paper. NAU W.A. Franke College of Business.


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In the past three decades, many rural communities endowed with rich natural amenity resources have moved from goods-producing activities to service-producing activities. Conventional wisdom argues that service-producing activities like tourist expenditures and recreation activities generate demands for traded goods and services, and create jobs and income for local residents in counties endowed with rich natural amenities. However, more recent studies have suggested that regions with high levels of amenities can experience lower wages and higher unemployment because workers who reside in low amenity regions must be compensated via higher wages and people living in high amenity areas might be willing to accept periods of unemployment. Numerous researchers utilize principal component analysis to compress groups of variables that describe attributes of natural-based amenities and quality of life into scalar measures. However, principal components often lack interpretability because they define some abstract scores which are often not meaningful. Here, we apply simple component analysis suggested by Rousson and Gasser (2004) to summarize the information in groups of variables into a limited number of simple components and improve interpretability at a modest loss of optimality. Simple components allow us to identify and interpret the effect of attributes that most influence regional economic performance so as to gain better insight into policies to preserve and advance those attributes.

Item Type: Monograph (Working Paper)
Publisher’s Statement: Copyright, where appropriate, is held by the author.
ID number or DOI: 05-05
Keywords: Working paper, amenity measures, goods procuding activities, service producing activites, wages, unemployment levels
Subjects: H Social Sciences > HA Statistics
H Social Sciences > HD Industries. Land use. Labor
NAU Depositing Author Academic Status: Faculty/Staff
Department/Unit: The W.A. Franke College of Business
Date Deposited: 19 Oct 2015 21:17
URI: http://openknowledge.nau.edu/id/eprint/1571

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