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Hedonic Housing Prices and Agricultural Pollution: An Empirical Investigation on Semiparametric Models

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  • Bontemps, Christophe
  • Simioni, Michel
  • Surry, Yves R.

Abstract

Many empirical studies challenged the parametric approach to estimate nonlinear house price models and to use instead nonparametric or semiparametric model specifications. In the area of environmental analysis using house price models, Stock (1991) and McMillen and Thorsen (2000) applied semi-parametric models to estimate the impact of hazardous wastes on house prices. Furthermore, estimating nonparametricaly house price models is gaining now additional momentum because Ekeland et al. (2002) provided a theoretical justification to use such an empirical approach to estimate hedonic price models. The objective of this paper is to assess the impact of agricultural pollution in a livestock intensive region of France using alternative non-parametric and semi-parametric hedonic price models. We propose a two stage estimation procedure were the first step is based on the partially linear model introduced by Robinson (1988). In the second step, once the parametric part of the model has been estimated on the house characteristics, we propose four specifications for the remaining functional form on the environmental variables. A parametric, a fully nonparametric, an additive, and a single index specifications are proposed and estimated using appropriate econometric procedures similar to those developed by Horowitz and Lee (2001), Iwata et al. (2000) and Robinson (1988). The performances of these models are examined, compared with respect to the benchmark nonparametric model and specification tests are proposed.

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Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2005 Annual meeting, July 24-27, Providence, RI with number 19547.

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Date of creation: 2005
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Handle: RePEc:ags:aaea05:19547

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Keywords: Research Methods/ Statistical Methods;

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  1. Richard C. Ready & Charles W. Abdalla, 2005. "The Amenity and Disamenity Impacts of Agriculture: Estimates from a Hedonic Pricing Model," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 87(2), pages 314-326.
  2. Brown, James N & Rosen, Harvey S, 1982. "On the Estimation of Structural Hedonic Price Models," Econometrica, Econometric Society, vol. 50(3), pages 765-68, May.
  3. Patrick Bajari & Matthew E. Kahn, 2003. "Estimating Housing Demand with an Application to Explaining Racial Segregation in Cities," NBER Working Papers 9891, National Bureau of Economic Research, Inc.
  4. Raymond B. Palmquist & Fritz M. Roka & Tomislav Vukina, 1997. "Hog Operations, Environmental Effects, and Residential Property Values," Land Economics, University of Wisconsin Press, vol. 73(1), pages 114-124.
  5. Hardle, W. & Tsybakov, A., 1991. "How sensitive are average derivates ?," CORE Discussion Papers 1991044, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Herriges, Joseph A. & Secchi, Silvia & Babcock, Bruce A., 2003. "Living with Hogs in Iowa: The Impact of Livestock Facilities on Rural Residential Property Values," Staff General Research Papers 10683, Iowa State University, Department of Economics.
  7. R. Kelley Pace, 1998. "Appraisal Using Generalized Additive Models," Journal of Real Estate Research, American Real Estate Society, vol. 15(1), pages 77-100.
  8. Okmyung Bin & Carlos Martins-Filho, . "Estimation of Hedonic Price Functions via Additive Nonparametric Regression," Working Papers 0116, East Carolina University, Department of Economics.
  9. Sudip Chattopadhyay, 1999. "Estimating the Demand for Air Quality: New Evidence Based on the Chicago Housing Market," Land Economics, University of Wisconsin Press, vol. 75(1), pages 22-38.
  10. Hardle, W. & Mammen, E., 1990. "Comparing nonparametric versus parametric regression fits," CORE Discussion Papers 1990065, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  11. Gozalo, Pedro L. & Linton, Oliver B., 2001. "Testing additivity in generalized nonparametric regression models with estimated parameters," Journal of Econometrics, Elsevier, vol. 104(1), pages 1-48, August.
  12. Horowitz, Joel L., 1987. "Identification and stochastic specification in Rosen's hedonic price model," Journal of Urban Economics, Elsevier, vol. 22(2), pages 165-173, September.
  13. Robinson, Peter M, 1988. "Root- N-Consistent Semiparametric Regression," Econometrica, Econometric Society, vol. 56(4), pages 931-54, July.
  14. Pace, R Kelley, 1993. "Nonparametric Methods with Applications to Hedonic Models," The Journal of Real Estate Finance and Economics, Springer, vol. 7(3), pages 185-204, November.
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