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Measuring the Monetary Value of Social Relations: a Hedonic Approach

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  • Emilio Colombo
  • Luca Stanca

Abstract

This paper presents an application of the hedonic approach to measure the monetary price of social relations. We use individual-level data for housing and labor markets in 103 Italian cities to estimate the price of relational amenities and construct monetary indexes of quality of relational life. We focus on time spent with friends, active participation in associations and frequency of going out for leisure activities, while controlling for standard amenities such as weather, environment, services, and socio-demographic characteristics. We find that individuals are willing to pay a positive and significant monetary price to live in cities where people spend more time with their friends. A one standard deviation increase in the share of those who meet their friends most frequently is worth an extra \euro 1,150 per year in terms of higher housing costs and foregone wages.

Suggested Citation

  • Emilio Colombo & Luca Stanca, 2013. "Measuring the Monetary Value of Social Relations: a Hedonic Approach," Working Papers 256, University of Milano-Bicocca, Department of Economics, revised Oct 2013.
  • Handle: RePEc:mib:wpaper:256
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    References listed on IDEAS

    as
    1. Christian Bjornskov, 2003. "The Happy Few: Cross--Country Evidence on Social Capital and Life Satisfaction," Kyklos, Wiley Blackwell, vol. 56(1), pages 3-16, February.
    2. Marcel Fafchamps, 2006. "Development and social capital," Journal of Development Studies, Taylor & Francis Journals, vol. 42(7), pages 1180-1198.
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    Cited by:

    1. Rotondi, Valentina & Stanca, Luca & Tomasuolo, Miriam, 2017. "Connecting alone: Smartphone use, quality of social interactions and well-being," Journal of Economic Psychology, Elsevier, vol. 63(C), pages 17-26.
    2. Luca Stanca & Ruut Veenhoven, 2015. "Consumption and happiness: an introduction," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 62(2), pages 91-99, June.
    3. Emilio, Colombo & Valentina, Rotondi & Luca, Stanca, 2016. "Macroeconomic Conditions and Well-being: Do Social Interactions Matter?," Working Papers 355, University of Milano-Bicocca, Department of Economics, revised 31 Dec 2016.
    4. Orlowski, Johannes & Wicker, Pamela, 2015. "The monetary value of social capital," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 57(C), pages 26-36.

    More about this item

    Keywords

    social relations; social capital; hedonic prices; quality of life; well-being;

    JEL classification:

    • A13 - General Economics and Teaching - - General Economics - - - Relation of Economics to Social Values
    • C4 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics
    • D6 - Microeconomics - - Welfare Economics
    • I31 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General Welfare, Well-Being
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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