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Valuing rail access using transport innovations

Author Info

Listed author(s):
  • Stephen Gibbons
  • Stephen Machin

Abstract

In this paper we implement a powerful empirical approach than has not previously been applied to rail transport evaluation to ascertain how much consumers value rail access. We study the effects on house prices of a transport innovation that altered the distance to the nearest station for some households, but left others unaffected. The transport innovation we study is the construction of new stations under improvements made to the London Underground and Docklands Light Railway in South East London in the late 1990s. Using the innovation to implement a quasi-experimental approach studying house price changes in affected versus unaffected areas allows us to avoid the biases inherent in cross-sectional valuation work. Our evidence on distance-station effects on prices suggests that rail access is significantly valued by households and that these valuations are sizable as compared to the valuations of other local amenities and services.

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File URL: http://eprints.lse.ac.uk/19989/
File Function: Open access version.
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Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 19989.

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Length: 37 pages
Date of creation: Jan 2004
Handle: RePEc:ehl:lserod:19989
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Web page: http://www.lse.ac.uk/

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Keywords: House Prices; Transport Innovations;

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Find related papers by JEL classification:
  • R4 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics

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  1. Gibbons, Steve & Machin, Stephen, 2003. "Valuing English primary schools," Journal of Urban Economics, Elsevier, vol. 53(2), pages 197-219, March.
  2. Ciccone, Antonio & Hall, Robert E, 1996. "Productivity and the Density of Economic Activity," American Economic Review, American Economic Association, vol. 86(1), pages 54-70, March.
  3. Johannes BrÃcker, 1998. "original: Operational spatial computable general equilibrium modeling," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 32(3), pages 367-387.
  4. Ciccone, Antonio, 2002. "Agglomeration effects in Europe," European Economic Review, Elsevier, vol. 46(2), pages 213-227, February.
  5. Steve Gibbons, 2004. "The Costs of Urban Property Crime," Economic Journal, Royal Economic Society, vol. 114(499), pages 441-463, November.
  6. Sandra E. Black, 1999. "Do Better Schools Matter? Parental Valuation of Elementary Education," The Quarterly Journal of Economics, Oxford University Press, vol. 114(2), pages 577-599.
  7. Javier Asensio, 2002. "Transport Mode Choice by Commuters to Barcelona's CBD," Urban Studies, Urban Studies Journal Limited, vol. 39(10), pages 1881-1895, September.
  8. Vladimir Bajic, 1983. "The Effects of a New Subway Line on Housing Prices in Metropolitan Toronto," Urban Studies, Urban Studies Journal Limited, vol. 20(2), pages 147-158, May.
  9. McDonald, John F. & Osuji, Clifford I., 1995. "The effect of anticipated transportation improvement on residential land values," Regional Science and Urban Economics, Elsevier, vol. 25(3), pages 261-278, June.
  10. Dewees, D. N., 1976. "The effect of a subway on residential property values in Toronto," Journal of Urban Economics, Elsevier, vol. 3(4), pages 357-369, October.
  11. Gramlich, Edward M, 1994. "Infrastructure Investment: A Review Essay," Journal of Economic Literature, American Economic Association, vol. 32(3), pages 1176-1196, September.
  12. Henderson, J. Vernon, 2003. "Marshall's scale economies," Journal of Urban Economics, Elsevier, vol. 53(1), pages 1-28, January.
  13. Daniel P. McMillen & John McDonald, 2004. "Reaction of House Prices to a New Rapid Transit Line: Chicago's Midway Line, 1983-1999," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 32(3), pages 463-486, 09.
  14. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
  15. Bowes, David R. & Ihlanfeldt, Keith R., 2001. "Identifying the Impacts of Rail Transit Stations on Residential Property Values," Journal of Urban Economics, Elsevier, vol. 50(1), pages 1-25, July.
  16. Sheppard, Stephen, 1999. "Hedonic analysis of housing markets," Handbook of Regional and Urban Economics,in: P. C. Cheshire & E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 3, chapter 41, pages 1595-1635 Elsevier.
  17. Coffman, Chad & Gregson, Mary Eschelbach, 1998. "Railroad Development and Land Value," The Journal of Real Estate Finance and Economics, Springer, vol. 16(2), pages 191-204, March.
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