Quasi-Experiments and Hedonic Property Value Methods
AbstractThere has recently been a dramatic increase in the number of papers that have combined quasi-experimental methods with hedonic property models. This is largely due to the concern that cross-sectional hedonic methods may be severely biased by omitted variables. While the empirical literature has developed extensively, there has not been a consistent treatment of the theory and methods of combining hedonic property models with quasi-experiments. The purpose of this chapter is to fill this void. An effort is made to provide background information on the traditional hedonic theory, the traditional cross-sectional hedonic methods as well as the newer quasi-experimental hedonic methods that use program evaluation techniques. By connecting these two literatures, the underlying theoretical and empirical assumptions necessary to estimate the marginal willingness to pay for a housing characteristic are highlighted. The chapter also provides a practical how to guide on implementing a quasi-experimental hedonic analysis. This is done by focusing on a series of steps that can help to ensure the reliability of a quasi-experimental identification strategy. We illustrate this process using several recent papers from the literature.
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Bibliographic InfoPaper provided by University of Miami, Department of Economics in its series Working Papers with number 2012-7.
Length: 92 pages
Date of creation: 09 Feb 2012
Date of revision:
Publication status: Forthcoming: Under Review
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Regression Discontinuity; Differences-in-Differences; Property Value; Program Evaluation; Marginal Willingness to Pay; Capitalization;
Find related papers by JEL classification:
- C9 - Mathematical and Quantitative Methods - - Design of Experiments
- D6 - Microeconomics - - Welfare Economics
- Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
- R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-09-30 (All new papers)
- NEP-ECM-2012-09-30 (Econometrics)
- NEP-URE-2012-09-30 (Urban & Real Estate Economics)
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