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Estimating Housing Demand with an Application to Explaining Racial Segregation in Cities

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Patrick Bajari
Matthew E. Kahn

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Abstract

We present a three-stage estimation procedure to recover willingness to pay for housing attributes. In the first stage, we estimate a non-parametric hedonic home price function. Second, we recover each consumer's taste parameters for product characteristics using first order conditions for utility maximization. Finally, we estimate the distribution of household tastes as a function of household demographics. As an application of our methods, we compare alternative explanations for why blacks choose to live in center cities while whites suburbanize.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9891.

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Date of creation: Aug 2003
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Handle: RePEc:nbr:nberwo:9891

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R0 - Urban, Rural, and Regional Economics - - General
C5 - Mathematical and Quantitative Methods - - Econometric Modeling

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  1. Patrick Bajari & Han Hong & Ahmed Khwaja, 2006. "Moral Hazard, Adverse Selection and Health Expenditures: A Semiparametric Analysis," NBER Working Papers 12445, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  2. François Ortalo-Magné & Sven Rady, 2005. "Heterogeneity within Communities: A Stochastic Model with Tenure Choice," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
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  3. Lall, Somik V. & Lundberg, Mattias, 2006. "What are public services worth, and to whom ? Non-parametric estimation of capitalization in Pune," Policy Research Working Paper Series 3924, The World Bank. [Downloadable!]
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  4. John M. Clapp & Anupam Nanda & Stephen L. Ross, 2005. "Which School Attributes Matter? The Influence of School District Performance and Demographic Composition on Property Values," Working papers 2005-26, University of Connecticut, Department of Economics, revised Jan 2007. [Downloadable!]
  5. Patrick Bayer & Fernando Ferreira & Robert McMillan, 2007. "A Unified Framework for Measuring Preferences for Schools and Neighborhoods," NBER Working Papers 13236, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  6. Suzi Kerr & Andrew Aitken & Arthur Grimes, 2004. "Land Taxes and Revenue Needs as Communities Grow and Decline: Evidence from New Zealand," Working Papers 04_02, Motu Economic and Public Policy Research. [Downloadable!]
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  7. C. Lanier Benkard & Patrick Bajari, 2004. "Demand Estimation with Heterogeneous Consumers and Unobserved Product Characteristics: A Hedonic Approach," NBER Working Papers 10278, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Arthur Grimes & Andrew Aitken & Suzi Kerr, 2004. "House Price Efficiency: Expectations, Sales, Symmetry," Urban/Regional 0408001, EconWPA. [Downloadable!]
  9. Bandyopadhyay, Arindam & Kuvalekar, S V & Basu, Sanjay & Baid, Shilpa & Saha, Asish, 2008. "A Study of Residential Housing Demand in India," MPRA Paper 9339, University Library of Munich, Germany. [Downloadable!]
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