Which hedonic models can we trust to recover the marginal willingness to pay for environmental amenities?

Nicolai V. Kuminoff, Christopher F. Parmeter, Jaren C. Pope

Research output: Contribution to journalArticle

187 Citations (Scopus)

Abstract

The hedonic property value model is among our foremost tools for evaluating the economic consequences of policies that target the supply of local public goods, environmental services, and urban amenities. We design a theoretically consistent and empirically realistic Monte Carlo study of whether omitted variables seriously undermine the method's ability to accurately identify economic values. Our results suggest that large gains in accuracy can be realized by moving from the standard linear specifications for the price function to a more flexible framework that uses a combination of spatial fixed effects, quasi-experimental identification, and temporal controls for housing market adjustment.

Original languageEnglish (US)
Pages (from-to)145-160
Number of pages16
JournalJournal of Environmental Economics and Management
Volume60
Issue number3
DOIs
StatePublished - Nov 1 2010

Fingerprint

willingness to pay
amenity
housing market
economics
Hedonic model
Amenities
Omitted variables
Monte Carlo study
Property values
Local public goods
Economic value
Housing market
Willingness-to-pay
Environmental services
Environmental amenities
Economic consequences
Fixed effects
effect
method
policy

Keywords

  • Functional form
  • Hedonic
  • Omitted variable
  • Quasi-experiment

ASJC Scopus subject areas

  • Economics and Econometrics
  • Management, Monitoring, Policy and Law

Cite this

Which hedonic models can we trust to recover the marginal willingness to pay for environmental amenities? / Kuminoff, Nicolai V.; Parmeter, Christopher F.; Pope, Jaren C.

In: Journal of Environmental Economics and Management, Vol. 60, No. 3, 01.11.2010, p. 145-160.

Research output: Contribution to journalArticle

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