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Measuring the Monetary Value of Social Relations: a Hedonic Approach

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  • Emilio Colombo
  • Luca Stanca

Abstract

This paper presents an application of the hedonic approach to measure the monetary price of social relations. We use individual-level data for housing and labor markets in 103 Italian cities to estimate the price of relational amenities and construct monetary indexes of quality of relational life. We focus on time spent with friends, active participation in associations and frequency of going out for leisure activities, while controlling for standard amenities such as weather, environment, services, and socio-demographic characteristics. We find that individuals are willing to pay a positive and significant monetary price to live in cities where people spend more time with their friends. A one standard deviation increase in the share of those who meet their friends most frequently is worth an extra \euro 1,150 per year in terms of higher housing costs and foregone wages.

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File URL: http://dipeco.economia.unimib.it/repec/pdf/mibwpaper256.pdf
File Function: First version, 2013
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Bibliographic Info

Paper provided by University of Milano-Bicocca, Department of Economics in its series Working Papers with number 256.

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Length: 26
Date of creation: Oct 2013
Date of revision: Oct 2013
Handle: RePEc:mib:wpaper:256

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Keywords: social relations; social capital; hedonic prices; quality of life; well-being;

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References

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  1. Luigino Bruni & Luca Stanca, 2005. "Watching alone: Relational Goods, Television and Happiness," Working Papers 90, University of Milano-Bicocca, Department of Economics, revised Jun 2005.
  2. John Helliwell, 2005. "Well-Being, Social Capital and Public Policy: What's New?," NBER Working Papers 11807, National Bureau of Economic Research, Inc.
  3. Steven N. Durlauf, 2002. "On the Empirics of Social Capital," Economic Journal, Royal Economic Society, vol. 112(483), pages 459-479, November.
  4. Sarracino, Francesco, 2010. "Social capital and subjective well-being trends: Comparing 11 western European countries," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(4), pages 482-517, August.
  5. Stanca, Luca, 2009. "With or without you? Measuring the quality of relational life throughout the world," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 38(5), pages 834-842, October.
  6. Bernard M. S. van Praag & Barbara E. Baarsma, 2005. "Using Happiness Surveys to Value Intangibles: The Case of Airport Noise," Economic Journal, Royal Economic Society, vol. 115(500), pages 224-246, 01.
  7. Leonardo Becchetti & Elena Giachin Ricca & Alessandra Pelloni, 2012. "The Relationship Between Social Leisure and Life Satisfaction: Causality and Policy Implications," Social Indicators Research, Springer, vol. 108(3), pages 453-490, September.
  8. Diwan, Romesh, 2000. "Relational wealth and the quality of life," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 29(4), pages 305-340, July.
  9. Christian Bjornskov, 2003. "The Happy Few: Cross--Country Evidence on Social Capital and Life Satisfaction," Kyklos, Wiley Blackwell, vol. 56(1), pages 3-16, February.
  10. Bjornskov, Christian, 2006. "The multiple facets of social capital," European Journal of Political Economy, Elsevier, vol. 22(1), pages 22-40, March.
  11. Simon Moore & Jonathan Shepherd, 2006. "The cost of fear: shadow pricing the intangible costs of crime," Applied Economics, Taylor & Francis Journals, vol. 38(3), pages 293-300.
  12. Emilio Colombo & Alessandra Michelangeli & Luca Stanca, 2010. "La Dolce Vita: Hedonic Estimates of Quality of Life in Italian Cities," Working Papers 201, University of Milano-Bicocca, Department of Economics, revised Dec 2010.
  13. Bruno Frey & Simon Luechinger & Alois Stutzer, 2009. "The life satisfaction approach to valuing public goods: The case of terrorism," Public Choice, Springer, vol. 138(3), pages 317-345, March.
  14. Knack, Stephen & Keefer, Philip, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1251-88, November.
  15. Roback, Jennifer, 1982. "Wages, Rents, and the Quality of Life," Journal of Political Economy, University of Chicago Press, vol. 90(6), pages 1257-78, December.
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