This paper has a twofold objective. First, we develop a new method to assess the monetary valuefor individuals of external effects. The method makes use of an ordinal index of life satisfaction asscored by individual respondents who are subjected in varying intensity to the external effect. Oursecond objective is to assess, with this method, to what extent noise nuisance effects aroundAmsterdam Airport Schiphol are internalized and what should be the monetary compensation forthe nuisance. Such a compensation scheme depends on, among other things, the objective noiselevel, income and the presence of noise insulation.