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A Hierarchical Model of Housing Choice

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  • Thomas P. Boehm

    (Department of Finance, The University of Tennessee, Knoxville)

Abstract

The main objective of this paper is the construction of an expanded model of housing choice that includes not only tenure choice, which has traditionally been the subject of analysis, but also other housing characteristic choices. In this model the probability of the household making a given tenure choice is estimated at the first level of a choice hierarchy. The family's choices over dwelling size and quality are then estimated at succeeding levels of that hierarchy, conditionally on the choices which precede them. These conditional probabilities can be combined with the probability of tenure choice to produce eight joint probabilities of housing choice. In addition, for a particular household or group of households, we can determine the effect of a change in any of the systems variables on the probability of the families making a given housing choice. In the empirical section it is demonstrated that this model provides much greater insight than the conventional tenure choice study regarding the effects of income, relative prices, and other socioeconomic variables on the family's housing choices. Consequently, it is concluded that models of this type should provide a superior tool for designing effective housing policy.

Suggested Citation

  • Thomas P. Boehm, 1982. "A Hierarchical Model of Housing Choice," Urban Studies, Urban Studies Journal Limited, vol. 19(1), pages 17-31, February.
    • Handle: RePEc:sae:urbstu:v:19:y:1982:i:1:p:17-31
    DOI: 10.1080/00420988220080021
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    References listed on IDEAS

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    1. John P. Shelton, 1968. "The Cost of Renting versus Owning a Home," Land Economics, University of Wisconsin Press, vol. 44(1), pages 59-72.
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    3. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132-132.
    4. John M. Quigley, 1976. "Housing Demand in the Short Run: An Analysis of Polytomous Choice," NBER Chapters, in: Explorations in Economic Research, Volume 3, number 1, pages 76-102, National Bureau of Economic Research, Inc.
    5. John F. Kain & John M. Quigley, 1975. "Housing Markets and Racial Discrimination: A Microeconomic Analysis," NBER Books, National Bureau of Economic Research, Inc, number kain75-1, March.
    6. Li, Mingche M, 1977. "A Logit Model of Homeownership," Econometrica, Econometric Society, vol. 45(5), pages 1081-1097, July.
    7. John F. Kain & John M. Quigley, 1975. "Racial Discrimination in Urban Housing Markets," NBER Chapters, in: Housing Markets and Racial Discrimination: A Microeconomic Analysis, pages 56-91, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Estiri, Hossein, 2014. "Building and household X-factors and energy consumption at the residential sector," Energy Economics, Elsevier, vol. 43(C), pages 178-184.

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