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Measuring the Monetary Value of Social Relations: a Hedonic Approach

Listed author(s):
  • Emilio Colombo
  • Luca Stanca

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.

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File URL: http://dems.unimib.it/repec/pdf/mibwpaper256.pdf
File Function: First version, 2013
Download Restriction: no

Paper provided by University of Milano-Bicocca, Department of Economics in its series Working Papers with number 256.

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Length: 26
Date of creation: Oct 2013
Date of revision: Oct 2013
Handle: RePEc:mib:wpaper:256
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  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. Steven N. Durlauf & Yannis M. Ioannides, 2010. "Social Interactions," Annual Review of Economics, Annual Reviews, vol. 2(1), pages 451-478, 09.
  3. Leonardo Becchetti & Alessandra Pelloni & Fiammetta Rossetti, 2008. "Relational Goods, Sociability, and Happiness," Kyklos, Wiley Blackwell, vol. 61(3), pages 343-363, 08.
  4. Bruni, Luigino & Stanca, Luca, 2008. "Watching alone: Relational goods, television and happiness," Journal of Economic Behavior & Organization, Elsevier, vol. 65(3-4), pages 506-528, March.
  5. Bruno S. Frey & Simon Luechinger & Alois Stutzer, 2010. "The Life Satisfaction Approach to Environmental Valuation," Annual Review of Resource Economics, Annual Reviews, vol. 2(1), pages 139-160, October.
  6. Marcel Fafchamps, 2006. "Development and social capital," Journal of Development Studies, Taylor & Francis Journals, vol. 42(7), pages 1180-1198.
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