Necessary conditions for valid benefit transfers

Benefit transfer is an approach to estimating costs and benefits of policies in the absence of original data collection. Two benefit transfer methods are capable of ensuring the analysis is theoretically consistent: preference calibration (PC) and preference function transfer (PFT), PC and PFT. Both approaches seek to estimate structural preference parameters for consumers and then transfer the corresponding utility function to the new policy application. The difference between the two methods is that PFT uses the results from a previous study to transfer a utility function whereas PC uses previous value estimates to calibrate the parameters of a utility function posited by the benefit-transfer practitioner. A partial equilibrium perspective is clearly less appropriate for large changes that may force people to adjust immediately or even relatively small changes where the incremental cost of adjustment is minimal.