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Validating Spatial Hedonic Modeling with a Behavioral Approach: Measuring the Impact of Water Quality Degradation on Coastal Housing Markets

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  • Mahesh, Ramachandran

Abstract

Human perception of water quality that determines utility and behavior may not correspond to often used science-based measures, leading to mismeasurement of implicit prices in hedonic models. This paper seeks to estimate the effect of water quality degradation on the sale price of coastal single-family residential properties using a spatially explicit hedonic approach, while validating the measure of water quality using a behavioral approach. The results show that a combined approach of hedonic modeling and behavioral validation is an important preliminary step in addressing omitted variable and perception biases present in traditional hedonic modeling approaches.

Suggested Citation

  • Mahesh, Ramachandran, 2015. "Validating Spatial Hedonic Modeling with a Behavioral Approach: Measuring the Impact of Water Quality Degradation on Coastal Housing Markets," 2015 AAEA & WAEA Joint Annual Meeting, July 26-28, San Francisco, California 205664, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea15:205664
    DOI: 10.22004/ag.econ.205664
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    References listed on IDEAS

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