An analysis of visitors' expenditures in a tourist destination: OLS, quantile regression and instrumental variable estimators

The impact of tourism on the local economy and employment has been widely reported in the literature through the use of regional or county expenditure multipliers. Indeed, the money that visitors spend in a community is likely to be the benefit that residents probably recognize most readily. Despite this, only a few studies have focused on the determinants of tourist expenditure at the individual or household level. This paper sheds further light on this issue. For this purpose, the authors use information gathered by interviewing visitors about their levels of expenditure. The analysis focuses on total expenditure and expenditures on lodging, restaurants, shopping and car rental, and uses OLS, quantile regression and instrumental variable techniques. The results suggest that the impact of socio-demographic and trip-related characteristics on tourist expenditures goes far beyond the mean effect. Furthermore, correcting for the endogeneity of some explanatory variables might be a worthwhile exercise.