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Learning In A Hedonic Framework: Valuing Brownfield Remediation

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  • Lala Ma

Abstract

Incomplete information in property value hedonic models can bias estimates of marginal willingness to pay (MWTP). Using brownfield remediation as an application, this article recovers hedonic values from a dynamic neighborhood choice framework that allows households to learn about brownfield contamination in a Bayesian fashion before choosing where to live. I find that ignoring learning yields nontrivial biases to the MWTP estimate. This has important implications for hedonic valuation if agents are imperfectly informed. Estimates are used to calculate information's value had it been withheld from the public and to assess heterogeneity in information's value along site and homebuyer demographics.

Suggested Citation

  • Lala Ma, 2019. "Learning In A Hedonic Framework: Valuing Brownfield Remediation," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 60(3), pages 1355-1387, August.
    • Handle: RePEc:wly:iecrev:v:60:y:2019:i:3:p:1355-1387
    DOI: 10.1111/iere.12389
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    Cited by:

    1. Hausman, Catherine & Stolper, Samuel, 2021. "Inequality, information failures, and air pollution," Journal of Environmental Economics and Management, Elsevier, vol. 110(C).
    2. Ranie Lin & Lala Ma & Toan Phan, 2021. "Race and Environmental Worries," Working Paper 21-15, Federal Reserve Bank of Richmond.
    3. Bieri, David S. & Kuminoff, Nicolai V. & Pope, Jaren C., 2023. "National expenditures on local amenities," Journal of Environmental Economics and Management, Elsevier, vol. 117(C).
    4. Bakkensen, Laura A. & Ma, Lala, 2020. "Sorting over flood risk and implications for policy reform," Journal of Environmental Economics and Management, Elsevier, vol. 104(C).
    5. Kalouptsidi, Myrto & Scott, Paul T. & Souza-Rodrigues, Eduardo, 2021. "Linear IV regression estimators for structural dynamic discrete choice models," Journal of Econometrics, Elsevier, vol. 222(1), pages 778-804.
    6. Gibbons, Stephen & Heblich, Stephan & Timmins, Christopher, 2021. "Market tremors: Shale gas exploration, earthquakes, and their impact on house prices," Journal of Urban Economics, Elsevier, vol. 122(C).

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