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Neighborhood Effects and Housing

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  • Yannis M. Ioannides

Abstract

This chapter presents a number of approaches that economists have used in studying neighborhood effects in housing markets. It emphasizes how individuals in effect choose neighborhood effects, or more generally social interactions, via their location decisions. The chapter looks constructively at neighborhood effects and rather than reviewing the role of neighborhood effects as mere externalities that might interfere with locational equilibrium, and focuses on what we have learned empirically about their role by observing locational decisions along with individual and group characteristics. It examines several classes of models which economists have relied upon in exploring the role and empirical significance of neighborhood effects that originate in housing markets. It takes the concept of neighborhood effects quite literally as arising in residential neighborhoods. For precisely this reason, the chapter emphasizes how we may detect empirically the presence of neighborhood effects when they may be priced by housing markets and be capitalized into housing values and rents. The chapter focuses on models that are empirically relevant and help identify neighborhood effects, and discusses actual empirical findings.

Suggested Citation

  • Yannis M. Ioannides, 2010. "Neighborhood Effects and Housing," Discussion Papers Series, Department of Economics, Tufts University 0747, Department of Economics, Tufts University.
  • Handle: RePEc:tuf:tuftec:0747
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    Cited by:

    1. Patacchini, Eleonora & Rainone, Edoardo & Zenou, Yves, 2011. "Dynamic Aspects of Teenage Friendships and Educational Attainment," Research Papers in Economics 2011:4, Stockholm University, Department of Economics.
    2. repec:wly:quante:v:9:y:2018:i:1:p:247-303 is not listed on IDEAS
    3. ÖZGÜR, Onur & BISIN, Alberto, 2011. "Dynamic Linear Economies with Social Interactions," Cahiers de recherche 04-2011, Centre interuniversitaire de recherche en économie quantitative, CIREQ.
    4. Bento, Antonio M. & Franco, Sofia F. & Kaffine, Daniel, 2011. "Welfare Effects of Anti-Sprawl Policies in the Presence of Urban Decline," Agricultural and Resource Economics Review, Cambridge University Press, vol. 40(3), pages 439-450, December.
    5. Eleonora Patacchini & Yves Zenou, 2016. "Social networks and parental behavior in the intergenerational transmission of religion," Quantitative Economics, Econometric Society, vol. 7(3), pages 969-995, November.
    6. Sato, Yasuhiro & Zenou, Yves, 2015. "How urbanization affect employment and social interactions," European Economic Review, Elsevier, vol. 75(C), pages 131-155.
    7. Yannis M. Ioannides & Jeffrey E. Zabel, 2003. "Neighbourhood effects and housing demand," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(5), pages 563-584.
    8. Dionissi Aliprantis & Daniel R. Carroll, 2018. "Neighborhood dynamics and the distribution of opportunity," Quantitative Economics, Econometric Society, vol. 9(1), pages 247-303, March.

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