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Hedonic Price Analysis and Selectivity Bias

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  • Phoebe Koundouri
  • Panos Pashardes

Abstract

Hedonic valuation of quality attributes can be misleading when theassumption that these attributes are exogenous to sample selection isviolated. This paper considers the simultaneity between hedonic valuationand sample selection in the context of a model of producer behavior andinvestigates empirically the case where land is demanded for use as an inputeither in agricultural production or in touristic development. The empiricalanalysis suggests that failing to correct for sample selection results in abiased valuation of the effect of water salinity on agricultural land. Copyright Kluwer Academic Publishers 2003

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  • Phoebe Koundouri & Panos Pashardes, 2003. "Hedonic Price Analysis and Selectivity Bias," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 26(1), pages 45-56, September.
    • Handle: RePEc:kap:enreec:v:26:y:2003:i:1:p:45-56
    DOI: 10.1023/A:1025633604579
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    References listed on IDEAS

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    1. Koundouri, Phoebe & Pashardes, Panos & Swanson, Timothy & Xepapadeas, Anastasios, 2003. "The Economics of Water Management in Developing Countries Problems, Principles and Policies," MPRA Paper 38137, University Library of Munich, Germany.
    2. James J. Heckman, 1976. "The Common Structure of Statistical Models of Truncation, Sample Selection and Limited Dependent Variables and a Simple Estimator for Such Models," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 5, number 4, pages 475-492, National Bureau of Economic Research, Inc.
    3. Ervin, David E. & Mill, John W., 1985. "Agricultural Land Markets and Soil Erosion: Policy Relevance and Conceptual Issues," 1985 Annual Meeting, August 4-7, Ames, Iowa 278510, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Peter P. Caulkins & Richard C. Bishop & Nicolaas W. Bouwes, 1986. "The Travel Cost Model for Lake Recreation: A Comparison of Two Methods for Incorporating Site Quality and Substitution Effects," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 68(2), pages 291-297.
    5. David E. Ervin & John W. Mill, 1985. "Agricultural Land Markets and Soil Erosion: Policy Relevance and Conceptual Issues," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 67(5), pages 938-942.
    6. Hausman, Jerry A. & Leonard, Gregory K. & McFadden, Daniel, 1995. "A utility-consistent, combined discrete choice and count data model Assessing recreational use losses due to natural resource damage," Journal of Public Economics, Elsevier, vol. 56(1), pages 1-30, January.
    7. 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..
    8. Phoebe Koundouri & Panos Pashardes & Timothy Swanson & Anastasios Xepapadeas, "undated". "The Economics of Water Management in Developing Countries Problems, Principles and Policies," DEOS Working Papers 0303, Athens University of Economics and Business.
    9. Daniel Hellerstein & Robert Mendelsohn, 1993. "A Theoretical Foundation for Count Data Models," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 75(3), pages 604-611.
    10. Koundouri, Phoebe, 2000. "Three approaches to measuring natural resource scarcity: theory and application to groundwater," MPRA Paper 38265, University Library of Munich, Germany.
    11. Russell, Clifford S. & Vaughan, William J., 1982. "The national recreational fishing benefits of water pollution control," Journal of Environmental Economics and Management, Elsevier, vol. 9(4), pages 328-354, December.
    12. Phoebe Koundouri & Panos Pashardes & Timothy M. Swanson & Anastasios Xepapadeas (ed.), 2003. "The Economics of Water Management in Developing Countries," Books, Edward Elgar Publishing, number 2846.
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    Cited by:

    1. Karousakis, Katia & Koundouri, Phoebe, 2006. "A Typology of Economic Instruments and Methods for Efficient Water Resources Management in Arid and Semi-Arid Regions," MPRA Paper 41909, University Library of Munich, Germany.
    2. Savage, Jeffrey & Ifft, Jennifer, 2013. "Does Pumping Pay: Groundwater Management Institutions and Cropland Values in Nebraska?," 2013 Annual Meeting, August 4-6, 2013, Washington, D.C. 150581, Agricultural and Applied Economics Association.
    3. Phoebe Koundouri, 2004. "Current Issues in the Economics of Groundwater Resource Management," Journal of Economic Surveys, Wiley Blackwell, vol. 18(5), pages 703-740, December.
    4. Ekin Birol & Phoebe Koundouri & Yiannis Kountouris, 2008. "Using Economic Valuation Techniques to Inform Water Resources Management in the Southern European, Mediterranean and Developing Countries: A Survey and Critical Appraisal of Available Techniques," DEOS Working Papers 0806, Athens University of Economics and Business.
    5. David Maddison, 2009. "A Spatio‐temporal Model of Farmland Values," Journal of Agricultural Economics, Wiley Blackwell, vol. 60(1), pages 171-189, February.
    6. Groom, Ben & Koundouri, Phoebe, 2011. "The Economics of Water Resource Allocation: Valuation Methods and Policy Implications," MPRA Paper 41902, University Library of Munich, Germany.
    7. Phoebe Koundouri, 2005. "Design and Implementation of an Integrated Water Management Approach," DEOS Working Papers 0501, Athens University of Economics and Business.
    8. Phoebe Koundouri & Angelos Alamanos & Kostas Dellis & Artemis Stratopoulou, 2022. "Ecosystem Services into Water Resource Planning and Management," DEOS Working Papers 2230, Athens University of Economics and Business.
    9. Phoebe Koundouri & Vassilis Skianis, 2015. "Socio-Economics and Water Management: Revisiting the Contribution of Economics in the Implementation of the Water Framework Directive in Greece and Cyprus," DEOS Working Papers 1506, Athens University of Economics and Business.
    10. Phoebe Koundouri & Stella Tsani & Nikitas Pittis & Eleftherios Levantis, 2019. "Socio-Economic Measures for Achieving Total Water Cost Recovery: A Brief Analysis with Illustration from the Evrotas River Basin, Greece," DEOS Working Papers 1912, Athens University of Economics and Business.
    11. Ben Groom & Phoebe Koundouri & Timothy Swanson, 2005. "Cost-benefit analysis and efficient water allocation in Cyprus," DEOS Working Papers 0502, Athens University of Economics and Business.
    12. Ay, Jean-Sauveur & Latruffe, Laure, 2013. "The Empirical Content of the Present Value Model: A survey of the instrumental uses of farmland prices," Working papers 157112, Factor Markets, Centre for European Policy Studies.

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