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Environmental Externalities And Housing Price In Madrid: An Application With Spatial Quantile Regression


  • Chasco Yrigoyen, Coro
  • Sánchez Reyes, Beatriz


Air pollution and urban noise are major concerns in big cities. This paper aims at evaluating how they impact transaction prices in downtown Madrid. For that purpose, we incorporate two subjective measures of air pollution and noise, joint with other variables available for individual characteristics, accessibility and socio-economic data, and we use spatial quantile models with a sample of 5,080 houses in downtown Madrid. Spatial quantile regressions are a good instrument to deal with common problems in hedonic models, such as non-linearity, non-normality due to asymmetries and outliers, heteroskedasticity and spatial autocorrelation. We find that noise and air-pollution have no clear significant effect except in the wealthier neighborhoods, where pollution is clearly a disamenity. Additionally, we find a counter-intuitive positive sign for the effect of noise only for the group of the most exclusive properties, possibly because of their owner high ‘sense of place’, joint to the existence of some other related positive associated externalities, such as upscale shops and historical or cultural areas.

Suggested Citation

  • Chasco Yrigoyen, Coro & Sánchez Reyes, Beatriz, 2012. "Environmental Externalities And Housing Price In Madrid: An Application With Spatial Quantile Regression," Revista Galega de Economía, University of Santiago de Compostela. Faculty of Economics and Business., vol. 21(2).
  • Handle: RePEc:sdo:regaec:v:21:y:2012:i:2_12

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