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Local environmental quality and life-satisfaction in Germany

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  • Rehdanz, Katrin
  • Maddison, David

Abstract

Hitherto the task of valuing differences in environmental quality arising from air pollution and noise nuisance has been carried out mainly by using the hedonic price technique. This paper proposes a different approach to deriving information on individual preferences for local environmental quality. It analyses data drawn from the German socio economic panel in an attempt to explain differences in self-reported levels of well-being in terms of environmental quality. Mindful of existing research a large number of other explanatory variables are included to control for socio-demographic differences, economic circumstances as well as neighbourhood characteristics. Differences in local air quality and noise levels are measured by how much an individual feels affected by air pollution or noise exposure in their residential area. The evidence suggests that even when controlling for a range of other factors higher local air pollution and noise levels significantly diminish subjective well-being. But interestingly differences in perceived air and noise pollution are not capitalised into differences in house prices.

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Bibliographic Info

Article provided by Elsevier in its journal Ecological Economics.

Volume (Year): 64 (2008)
Issue (Month): 4 (February)
Pages: 787-797

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Handle: RePEc:eee:ecolec:v:64:y:2008:i:4:p:787-797

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Web page: http://www.elsevier.com/locate/ecolecon

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  1. Rafael Di Tella & Robert J. MacCulloch & Andrew J. Oswald, 2003. "The Macroeconomics of Happiness," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 809-827, November.
  2. DiTella, Rafael & MacCulloch, Robert & Oswald, Andrew J., 2001. "Preferences over inflation and unemployment: Evidence from surveys of happiness," ZEI Working Papers B 03-2001, ZEI - Center for European Integration Studies, University of Bonn.
  3. Katrin Rehdanz & David J. Maddison, 2003. "Climate and Happiness," Working Papers FNU-20, Research unit Sustainability and Global Change, Hamburg University, revised Apr 2003.
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  10. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  11. Kahneman, Daniel & Wakker, Peter P & Sarin, Rakesh, 1997. "Back to Bentham? Explorations of Experienced Utility," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 375-405, May.
  12. Welsch, Heinz, 2002. "Preferences over Prosperity and Pollution: Environmental Valuation Based on Happiness Surveys," Kyklos, Wiley Blackwell, vol. 55(4), pages 473-94.
  13. Jon P. Nelson, 2004. "Meta-Analysis of Airport Noise and Hedonic Property Values," Journal of Transport Economics and Policy, London School of Economics and University of Bath, vol. 38(1), pages 1-27, January.
  14. Ferrer-i-Carbonell, Ada & Gowdy, John M., 2007. "Environmental degradation and happiness," Ecological Economics, Elsevier, vol. 60(3), pages 509-516, January.
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