The Random Utility Model (RUM) is a way to value new products or changes in public goods. But RUMs have been faulted along two lines. First, for including idiosyncratic errors that imply unreasonably high values for new alternatives and unrealistic substitution patterns. Second, for involving strong functional form restrictions. This paper shows how, starting with a revealed preference framework, one can partially identify nonparametrically the answers to policy questions about discrete alternatives. When the Generalized Axiom of Revealed Preference (GARP) is satisfied, the approach weakly identifies a pure characteristics model. When GARP is violated, it recasts the RUM errors as departures from GARP (critical cost efficiency), to be minimized using a minimum-distance criterion, thus coming as close to the pure characteristics model as the data allows. The paper illustrates the approach by estimating bounds on the values of ecological improvements using survey data.

Suggested Citation: Banzhaf, H. Spencer, “Valuing Policy Characteristics and New Products using a Simple Linear Program: The Pure Characteristics Model Revisited,” CEnREP Working Paper No. 26-001, May 2026, https://go.ncsu.edu/cenrep.wp.26.001.