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We Do Not Have the Same Tastes! Evaluating Individual Heterogeneity in the Preferences for Amenities

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  • Gustavo Ahumada

    (Universidad Católica del Norte)

  • Victor Iturra

    (Universidad Católica del Norte)

  • Mauricio Sarrias

    (Universidad Católica del Norte)

Abstract

It is widely recognized by scholars that amenities affect the individual well-being. Ample empirical evidence has been provided for developed countries, although this analysis for developing economies is scant. The aim of this paper is to study the association between locational specific characteristics and self-reported measures of subjective well-being. We focus our analysis in Chile, a developing country located in South America endowed with a rather heterogeneous set of amenities across cities. Using data from several sources to account for both natural and urban city amenities along with individual traits, our first results suggest that natural and urban amenities do affect the level of subjective well-being across Chilean cities. Afterwards, we allow for the estimated parameters associated to amenities vary to characterize the whole distribution rather than a single average parameter. This analysis uncovers the existence of unobserved individual heterogeneity, that is, individuals display different tastes for amenities not captured by observed traits, and consequently compensating variations associated to amenities differ across the sample. These results provide valuable elements to policy makers and city planners to the design of policies that enhance the population well-being and to the understanding of the development of cities in developing economies.

Suggested Citation

  • Gustavo Ahumada & Victor Iturra & Mauricio Sarrias, 2020. "We Do Not Have the Same Tastes! Evaluating Individual Heterogeneity in the Preferences for Amenities," Journal of Happiness Studies, Springer, vol. 21(1), pages 53-74, January.
    • Handle: RePEc:spr:jhappi:v:21:y:2020:i:1:d:10.1007_s10902-019-00081-2
    DOI: 10.1007/s10902-019-00081-2
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    More about this item

    Keywords

    Subjective well-being; Amenities; Heterogeneous preferences; Random parameters models; Compensating variation;
    All these keywords.

    JEL classification:

    • C35 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects

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