UNIVERSITY OF CALIFORNIA, LOS ANGELES
Department of Economics

Evolution of Hedonic Property Value Models
for the Valuation of Environmental Goods 

The following is an inventory of selected papers concerning the Hedonic Property Value (HPV) method for valuing non-market resources. Perusing this list will give you an idea of the evolution of thought concerning this method. The papers are listed in reverse chronological order. I will attempt to update these lists annually.

This inventory is intended for students in UCLA's graduate sequence in Environmental and Natural Resource Economics. The present update took place on February 28, 2001. CAUTION: I try to ensure that the update intervals overlap, but occasionally, I appear to miss a few papers. If your relevant published paper has been excluded, please let me know.

Taylor, L. O., and V. K. Smith (2000) "Environmental amenities as a source of market power," Land Economics, 76 (4), 550-568. Abstract: Site-specific environmental amenities can provide a source of product-differentiating market power Using estimates from hedonic-price equations and residual-demand models, our analysis recovers firm-specific estimates of price markups as measures of market power, and uses these markups to estimate the implied marginal value for access to coastal beaches. The application involves rental price and occupancy data for several thousand beach properties along a portion of the North Carolina coastline during the 1987 to 1992 rental seasons. Pendleton, L., and R. Mendelsohn (2000) "Estimating recreation preferences using hedonic travel cost and random utility models," Environmental & Resource Economics, 17 (1), 89-108. Abstract: Over the last decade, several authors have questioned the validity of the hedonic travel cost model, arguing instead that the random utility model is a superior method for valuing recreational site attributes. This paper demonstrates that the two methods emanate from a similar utility theoretic framework; yet in practice these methods differ in the assumptions made in their application. Constraining the underlying utility functions to be consistent, both models are applied to the valuation of recreational site attributes in the Southeastern United States. The way in which each method estimates preferences for site attributes is shown to depend critically on the method and the functional form of the underlying utility function. Gayer, T., J. T. Hamilton, and W. K. Viscusi (2000) "Private values of risk tradeoffs at superfund sites: Housing market evidence on learning about risk," Review of Economics and Statistics, 82 (3), 439-451. Abstract: This paper incorporates a Bayesian learning model into a hedonic framework to estimate the value that residents place on avoiding cancer risks from hazardous-waste sites. We show that residents are willing to pay to avoid cancer risks from Superfund sites before the U.S. Environmental Protection Agency (EPA) releases its assessment (known as the Remedial Investigation) of the site. Residents' willingness to pay to avoid risks actually decreases after the release of the Remedial Investigation, suggesting that the information lowers the perceived levels of risk. This estimated willingness to pay implies a statistical value of cancer similar to the value-of- life estimates in labor market studies. Lake, I. R., et al. (2000) "Using GIS and large-scale digital data to implement hedonic pricing studies," International Journal of Geographical Information Science, 14 (6), 521-541. Abstract: This paper describes how a standard GIS package can be used to convert large-scale vector digital data (point, line and annotation features) into polygons using standardised and replicable methods. Building area, garden and land use polygons are all derived from such data (Ordnance Survey Land- Line.Plus). These entities are then combined with further sources of digital data to derive more refined information such as property types. Finally, complex DEMs are developed for use in visibility studies. The variables calculated are subsequently employed in a property valuation study where many are found to be significant determinants of property price. The main exception is variables relating to viewsheds, although it is argued that this does not invalidate the techniques used in their deviation but highlights the difficulties involved in modelling a large number of variables in a property price analysis. Zabel, J. E., and K. A. Kiel (2000) "Estimating the demand for air quality in four US cities," Land Economics, 76 (2), 174-194. Abstract: An analysis of the demand for air quality in four MSAs in the United States is presented using the American Housing Survey data from 1974-1991, the Decennial U.S. Censuses, and the EPA Aerometric Information Retrieval System. The marginal prices of air quality are obtained from parameter estimates for the pollution variables in a hedonic house price model, and the marginal willingness to pay (inverse demand) equations for air quality are estimated using these prices. In two of the four (inverse) demand for air quality equations, the own-good coefficient is negative and significant, while the income coefficient is positive and significant. Michael, H. J., K. J. Boyle, and R. Bouchard (2000) "Does the measurement of environmental quality affect implicit prices estimated from hedonic models?," Land Economics, 76 (2), 283-298. Abstract: Hedonic property value models are often used to derive point estimates for identifying the relationship between environmental quality and property prices. The measurement of the environmental quality variable is often selected based on convenience, but variables reflecting different perceptions about environmental quality may result in implicit prices that vary substantially. This case study derives implicit prices for nine measures of water clarity using hedonic property value models of lakefront properties in Maine. Results show that water clarity variables based on different perceptions may result in differences in implicit prices large enough to potentially affect policy decisions. Shanmugam, K. R. (2000) "Valuations of life and injury risks - Empirical evidence from India," Environmental & Resource Economics, 16 (4), 379-389. Abstract: A research on valuing risks to life and health in the context of a developing country is practically non-existent. This study provides the first estimated values of life and health, using data from India. These values can aid policy makers, international agencies and researchers in evaluating health projects in developing nations. They can also be used to carry out comparisons with values obtained for developed countries. Liu, J. T., et al. (2000) "Mother's willingness to pay for her own and her child's health: A contingent valuation study in Taiwan," Health Economics, 9 (4), 319-326. Abstract: We use the contingent valuation (CV) method to estimate mothers' willingness to pay (WTP) to protect themselves and their children from suffering a minor illness-a cold-in Taiwan. WTP is specified as a hedonic function of the duration and severity of the cold (measured alternatively by symptoms experienced and the Quality of Well-Being (QWB) index) and of respondents' socioeconomic characteristics. The average mother is willing to pay more to protect her child than herself from suffering a cold. Median WTP to avoid the average mother's and child's colds are US$37 and US$57, respectively. Adjusting for the greater duration and severity of the average mother's cold suggests that WTP to prevent comparable illnesses is approximately twice as large for the child as for the mother. We also find that mother's WTP is about 20% greater to prevent a son's than a daughter's illness. Copyright (C) 2000 John Wiley Be Sons, Ltd. Pavlov, A. D. (2000) "Space-varying regression coefficients: A semi-parametric approach applied to real estate markets," Real Estate Economics, 28 (2), 249-283. Abstract: This paper presents a method for estimating home Values by non- parametrically incorporating the physical location of the properties. Specifically, I allow the parameters of the observed covariates to vary in space. This approach mitigates one of the biggest deficiencies inherent in hedonic pricing models-omitted variables. I demonstrate the advantages of the proposed method using real estate transaction data from Los Angeles County. The estimation finds a substantial spatial Variation of the marginal values of the hedonic characteristics and provides an insight into the segmentation of the market. The proposed method is an extension of semi-parametric multi- dimensional k-nearest-neighbor smoothing. It alleviates a fundamental problem known as the curse of dimensionality by incorporating parametric components into a non-parametric estimation. Gayer, T. (2000) "Neighborhood demographics and the distribution of hazardous waste risks: An instrumental variables estimation," Journal of Regulatory Economics, 17 (2), 131-155. Abstract: This paper examines whether the marginal price of risk reduction varies by the demographic characteristics of neighborhoods. Using an instrumental-variables approach to control for the two-way relationship between housing prices and environmental risk, the paper finds that the marginal valuation of risk reduction is higher in high-education and high-income neighborhoods. The results also suggest that environmental risks are greater in neighborhoods with low-priced houses and in neighborhoods with low levels of collective action, suggesting that polluters consider these characteristics when making their siting decisions. Mahan, B. L., S. Polasky, and R. M. Adams (2000) "Valuing urban wetlands: A property price approach," Land Economics, 76 (1), 100-113. Abstract: This study estimates the value of wetland amenities in the Portland, Oregon, metropolitan area using the hedonic property price model. Residential housing and wetland data are used to relate the sales price of a property to structural characteristics, neighborhood attributes, and amenities of wetlands and other environmental characteristics. Measures of interest are distance to and size of wetlands, including distance to four different wetland types; open water, emergent vegetation, scrub-shrub, and forested. Other environmental variables include proximity to parks, lakes, streams, and rivers. Results indicate that wetlands influence the value of residential property and that wetlands influence property values differently than other amenities. Increasing the size of the nearest wetland to a residence by one acre increased the residence's value by $24. Similarly, reducing the distance to nearest wetland by 1,000 feet increased the value by $436. Home values were not influenced by wetland type. (JEL Q25). Le Goffe, P. (2000) "Hedonic pricing of agriculture and forestry externalities," Environmental & Resource Economics, 15 (4), 397-401. Abstract: In this study, the hedonic price method was used to identify and monetarize some of the external effects of agricultural and sylvicultural activities. We examined the renting price of rural self-catering cottages, or gites. Intensive livestock farming caused the renting-price of gites to decrease, whereas permanent grassland had the opposite effect. Leggett, C. G., and N. E. Bockstael (2000) "Evidence of the effects of water quality on residential land prices," Journal of Environmental Economics and Management, 39 (2), 121-144. Abstract: We use hedonic techniques to show that water quality has a significant effect on property values along the Chesapeake Bay. We calculate the potential benefits from an illustrative (but limited) water quality improvement, and we calculate an upper bound to the benefits from a more widespread improvement. Many environmental hedonic studies have almost entirely ignored the potential for omitted variables bias-the possibility that pollution sources, in addition to emitting undesirable substances, are likely to be unpleasant neighbors. We discuss the implications of this oversight, and we provide an application that addresses this potential problem. (C) 2000 Academic Press. Palmquist, R. B., and A. Israngkura (1999) "Valuing air quality with hedonic and discrete choice models," American Journal of Agricultural Economics, 81 (5), 1128-1133. Chattopadhyay, S. (2000) "The effectiveness of McFaddens's nested logit model in valuing amenity improvement," Regional Science and Urban Economics, 30 (1), 23-43. Abstract: The paper presents an application of the nested legit model to a large, Chicago housing data set, with the goal of valuing environmental amenities. Four alternative hierarchical nestings based on dwelling, neighborhood, and city attributes an considered, and a sampling rule satisfying McFadden's uniform conditioning property is adopted. The benefit estimates of dwelling and city attributes are found to be less sensitive, while those of neighborhood attributes are found to be more sensitive to alternative nesting strategies. The effects of household demographics on parameter estimates generally conform to standard notions. A comparison of the model with the standard two-step hedonic model reveals that the benefit estimates are consistently lower in the case of the former. (C) 2000 Elsevier Science B.V. All rights reserved. Nimon, W., and J. Beghin (1999) "Are eco-labels valuable? Evidence from the apparel industry," American Journal of Agricultural Economics, 81 (4), 801-811. Abstract: Using apparel catalog data from the United States, we estimate hedonic price functions to identify market valuation of environmental attributes of apparel goods. We identify a significant and robust premium for the organic fibers embodied in the apparel goods. We also find a discount for the "no-dye" label. We do not, however, find any evidence of a premium for environment-friendly dyes. We further investigate the pricing behavior of apparel suppliers for potential heterogeneous pricing of the organic-fiber attribute and find no evidence of different premia across firms. Faux, J., and G. M. Perry (1999) "Estimating irrigation water value using hedonic price analysis: A case study in Malheur County, Oregon," Land Economics, 75 (3), 440-452. Abstract: Hedonic price analysis is applied to agricultural land sales to reveal the implicit market price of water in irrigation. This provides price information,,there otherwise absent, which can facilitate reallocation of rt ater supplies to meet growing demands. The failure to include available information an soil quality, an important determinant of agricultural land value, results in erroneous conclusions. Joint testing of heteroskedasticity and functional form is demonstrated. The value of irrigation water in this location is estimated at $9 for an acre-foot on the least productive land irrigated, and up to $44 per acre-foot on the most productive land. (JEL Q15). Wilson, M. A., and S. R. Carpenter (1999) "Economic valuation of freshwater ecosystem services in the United States: 1971-1997," Ecological Applications, 9 (3), 772-783. Abstract: The purpose of this paper is to provide ecologists and resource managers with a sense of where the economic science of ecosystem valuation has come from and where it might go in the future. To accomplish this, the paper provides a comprehensive synthesis of peer-reviewed economic data on surface freshwater ecosystems in the United States and examines major accomplishments and gaps in the literature. Economic value has been assigned to nonmarket goods and services provided by surface freshwater systems in the United States by 30 published, refereed articles in the scientific literature from 1971 to 1997. These studies have used variations of three approaches for a quantitative assessment of economic value: travel cost methods, hedonic pricing methods, and contingent valuation methods. To determine the economic value of nonmarket ecosystem goods and services, each method focuses on a different aspect of social benefit associated with lakes, streams, rivers, and wetlands. Valuation methodologies work from different underlying assumptions while possessing unique limitations and uncertainties. Dollar benefit estimates derived for nonmarket freshwater ecosystem goods and services from these studies tend to be specific to a particular method, ecosystem, and socioeconomic circumstance. Creative interdisciplinary research is needed on the quantitative measurement of surface freshwater ecosystem goods and service values, the relation of these values to key limnological variates, and communication of limnological insights to the public and social scientists in ways that facilitate and improve future management acid research. Dale, L., et al. (1999) "Do property values rebound from environmental stigmas? Evidence from Dallas," Land Economics, 75 (2), 311-326. Abstract: The Dallas area housing market is examined before, during, and after the closure and cleanup of a 50-year-old lead smelter, west of downtown Dallas, using a pooled time series and cross- sectional data set that covered all single-family homes sold through the multiple-listing service from 1979 through 1995- over 200,000 observations. Consistent with the existing literature, property values around the smelter were lower before the cleanup. However, after the cleanup, the prices consistently rebounded across all neighborhood types, although the areas that were nearest and poorest did so more slowly. (JEL Q20). Pendleton, L. (1999) "Reconsidering the hedonic vs. RUM debate in the valuation of recreational environmental amenities," Resource and Energy Economics, 21 (2), 167-189. Abstract: Two revealed preference methods have emerged as the primary tools for valuing the environmental amenities of recreational resources: the hedonic travel cost method and the random utility method, While both methods are now widely applied, considerable debate still exists over the appropriateness of each method, This paper examines this debate in the Literature and shows that much of the contention over the methods results from the improper application of the models or misinterpretations of the theory that underlies the models. Both models are shown to possess strengths and weaknesses that are important determinants of their effectiveness as valuation tools. (C) 1999 Elsevier Science B.V. All rights reserved. JEL classification: C25; Q23; Q26. Chattopadhyay, S. (1999) "Estimating the demand for air quality: New evidence based on the Chicago housing market," Land Economics, 75 (1), 22-38. Abstract: This paper combines a new, large household-level data set with the two-stage hedonic-estimation technique to derive new estimates of willingness to pay (WTP) for reduced air pollution. The WTP estimates are found robust against functional-form specification. Marginal WTP estimates for a reduction in particulate matter (PM-IO) are found to be quite comparable with some previous estimates. Benefits of nonmarginal changes exhibit consistently higher monetary returns in the case of PM-10 than in the ease of SO2, signifying that households dislike particulate pollution more than they do sulfur. (JEL Q25). Kluvankova, T. (1998) "Valuation of national parks in transitional economies," Ekonomicky Casopis, 46 (5), 671-694. Abstract: Most environmental assets are defined as public goods. Market failure in estimating market price for environmental goods can give the impression that they have little value or are unimportant relative to market prices, thus most environmental values can be lost. The main idea of this paper is to show that economic values of environmental and resource services can give valuable information supporting resource and environmental management decisions. The first part of: the paper explain difficulties in understanding the issue of environmental evaluation from the point of view of economics and the environment. Secondly it explores the theory concerned with valuation of non - market goods, stressing different approaches to measuring environmental values. Special attention is paid to the discussion on the theory of value, especially on non use values, e.g. intrinsic, bequest, philanthropic values of the environment. The paper also addresses the most critical problems in decision making and nature protection under the transitional economy of the Slovak Republic. Decision-making in pre-1989 Command and Control (CAC) regimes in Central and Eastern Europe was done by political representation and based on ideological or political principles, rather than economic characteristics. Environmental decision-making was generally limited to a supplement of land use - planning documentation with very low influence in the decision-making process. The key element missing in the former command and control approach to decision-making is consensus building and public involvement Political changes in 1989 and the economic transformation have resulted in a radical change in environmental policy in the Slovak Republic. The major accomplishment in the legal field today is a well-developed legislative framework in environmental decision-making. On the other hand, implementation and law enforcement is still inadequate. Citizens as individuals are not very active in environmental decision-making. Generally, there is a lack of interest in public matters and apathy towards getting involved in community life. Information is not transparent or accessible, either for the public or for non-governmental organisations or research institutions. Decisions are usually based on administrative principles without sufficient involvement of all interested parties. Any involvement of the public or other interested parties occurs in the late phases of the planning process when the detailed proposal already exists and it is too late to initiate meaningful change. Nature protection in the Slovak Republic is under the responsibility of the Ministry of Environment. The key piece of legislation in the field of nature protection is the Act on Nature and Landscape Protection, according to which the protection of nature is the fundamental priority within the protected areas., "Preservation of biodiversity, conservation and rational use of natural resources, and optimisation of land use" is one of the five priorities of the State Environmental Policy. The following most crucial problems can be summarised: Private property and economic interests versus nature protection After the political changes in 1989, property seized by the socialistic government in 1948 was returned to previous owners. Since all national parks (NPs) in Slovakia were created after 1948, much of the land within the parks is now privately-owned. However, the Nature Protection Act provides that the state will compensate private land owners for economic losses associated with any hindrance of their ability to use their property for economic gain but has not been realised yet. In order to generate economic profit within the shortest time period money generating activities e.g. timber, intensive tourism with the resulting emphasis on natural resource exploitation and over land-use, are provided. Competence in decision making process Under the present decision-making structure, NPs serves as an advisory body to the state administration. Most decisions affecting national parks are made by state administration and municipalities where most first hand knowledge and the needs of local communities are concentrated, but where also private interests of local stakeholders are more visible. Hence professional experience and skills concentrated within the NPs cannot be fully applied and their competence is limited to assistance with illegal constructions within the park or other radical activities, instead of active management of the park tied to sustainable land use. The major part of the paper focus on the description of the most common methods used in valuation of environmental values, focusing on traditional economic methods based on such real market observations as hedonic prices, opportunity costs, travel costs methods, as well as hypothetical market egg., contingent valuation, etc. Special attention is paid to the description of methods of complex environmental valuation, applicable directly for decision- making process (positional analysis). Finally, possibilities for the application of methods of environmental valuation under transitional economies are discussed in the conclusion. However research in valuation of environmental entities is a relatively undeveloped field in the Slovak Republic. Thus, my hopes are that this paper will help make these methods fully operational tools in policy and administrative decision-making. Pendleton, L. H., and R. Mendelsohn (1998) "Estimating the economic impact of climate change on the freshwater sportsfisheries of the Northeastern US," Land Economics, 74 (4), 483-496. Abstract: This study links models of global climate circulation, ecology, and economic valuation (hedonic travel cost and random utility models) to value the impact of global warming on freshwater sportfishing in the northeastern United States. An origin- specific linear random utility model (RUM) is introduced. The results of the RUM are shown to be comparable to those of a hedonic travel cost model. A doubling of atmospheric carbon dioxide is predicted to generate between a $4.6 million loss and a $20.5 million net benefit for the Northeast, depending on the climate scenario. Kim, C. W., T. Phipps, and L. Anselin (1998) "Measuring the benefits of air quality improvement: A spatial hedonic approach," American Journal of Agricultural Economics, 80 (5), 1183-1183. Leggett, C., and N. Bockstael (1998) "Evaluating the benefits of reductions in fecal coliform bacteria levels: A water quality hedonic," American Journal of Agricultural Economics, 80 (5), 1198-1198. Clapp, J. M., and C. Giaccotto (1998) "Residential hedonic models: A rational expectations approach to age effects," Journal of Urban Economics, 44 (3), 415-437. Abstract: This paper develops a rational expectations framework for interpreting the coefficient on age in a standard hedonic model. The model demonstrates that there are two components to the age coefficient: a pure cross-sectional depreciation component and a demand-side component that changes over time. We also show that a constant quality price index with age constant can be estimated by using any repeat sales database that contains the year of construction (or property age). When Fairfax County data are fitted to the model, the time series of age coefficients is non-stationary: they change from negative in the early 1980s to positive in the late 1980s; we infer that the demand-side component dominated in the latter period, (C) 1998 Academic Press. Hite, D. (1998) "Information and bargaining in markets for environmental quality," Land Economics, 74 (3), 303-316. Abstract: This paper explores the role of information on residential real estate prices. Housing transactions from 1990 formed the sample frame for surveying home buyers on their knowledge of local environmental disamenities, both at the time their homes were purchased, and when the survey was conducted. Of particular interest was home buyers' knowledge of nearby landfill sites. Because of clustering of survey responses, a sample selection model that combines transaction data with 1990 census micro delta was used. The results suggest that home buyers are poorly informed about disamenities, and that those who are informed bid down the price of a home. Spahr, Ronald W.; Sunderman, Mark A., "Property Tax Inequities on Ranch and Farm Properties," Land Economics; 74(3), August 1998, pages 374-89. Abstract: Previous studies have investigated residential real property tax inequity; however, little work exists regarding inequity in agricultural property taxation. This may result from agricultural land in most states being taxed based on differential assessment. In Wyoming, agricultural land is assessed on productive value, even though some lands sell for considerably more than productive value. Due to the presence of nonproductive features, these farms or ranches receive substantial tax subsidies. This study investigates horizontal, vertical, and market property tax inequity found on agricultural land in Wyoming. Through hedonic modeling, it is found that considerable agricultural property tax inequity exists. Hagy, Alison P., "The Demand for Child Care Quality: An Hedonic Price Theory Approach," Journal of Human Resources; 33(3), Summer 1998, pages 683- 710. Abstract: The author uses a hedonic price theory approach to estimate the demand for child care quality. Two complementary surveys, the National Child Care Survey, 1990 (NCCS) and the Profile of Child Care Settings Study (PCS), allow him to derive an implicit price for staff to child ratio. The author uses this price as an explanatory variable in a demand equation for this quality attribute. Direct purchase of service contracts or voucher programs, by subsidizing only those providers that satisfy state regulatory requirements, effectively lower the implicit price of regulated attributes, such as staff to child ratio. Results of this study suggest that such tied subsidies have almost no influence on the demand for child care quality. Dubin, Robin A., "Predicting House Prices Using Multiple Listings Data," Journal of Real Estate Finance and Economics; 17(1), July 1998, pages 35-59. Abstract: It is often necessary to accurately predict the price of a house between sales. One method of predicting house values is to use data on the characteristics of the area's housing stock to estimate a hedonic regression, using ordinary least squares (OLS) as the statistical technique. The coefficients of this regression are then used to produce the predicted house prices. However, this procedure ignores a potentially large source of information regarding house prices the correlations existing between the prices of neighboring houses. The purpose of this article is to show how these correlations can be incorporated when estimating regression coefficients and when predicting house prices. The practical difficulties inherent in using a technique called kriging to predict house prices are discussed. The article concludes with an example of the procedure using multiple listings data from Baltimore. Basu, Sabyasachi; Thibodeau, Thomas G., "Analysis of Spatial Autocorrelation in House Prices," Journal of Real Estate Finance and Economics; 17(1), July 1998, pages 61-85. Abstract: This article examines spatial autocorrelation in transaction prices of single family properties in Dallas, Texas. The empirical analysis is conducted using a semilog hedonic house price equation and a spherical autocorrelation function with data for over 5000 transactions of homes sold between 1991:4 and 1993:1. Properties are geocoded and assigned to separate housing submarkets within metropolitan Dallas. Hedonic and spherical autocorrelation parameters are estimated separately for each submarket using estimated generalized least squares (EGLS). We find strong evidence of spatial autocorrelation in transaction prices within submarkets. Results for spatially autocorrelated residuals are mixed. In four of eight submarkets, there is evidence of spatial autocorrelation in the hedonic residuals for single family properties located within a 1200 meter radius. In two submarkets, the hedonic residuals are spatially autocorrelated throughout the submarket, while the hedonic residuals are spatially uncorrelated in the remaining two submarkets. Finally, we compare OLS and kriged EGLS predicted values for properties sold during 1993:1. Kriged EGLS predictions are more accurate than OLS in six of eight submarkets, while OLS has smaller prediction errors in submarkets where the residuals are spatially uncorrelated and the estimated semivariogram has a large variance. Goodman, Allen C., "Andrew Court and the Invention of Hedonic Price Analysis," Journal of Urban Economics; 44(2), September 1998, pages 291-98. Abstract: Although popularized by Zvi Griliches in the early 1960s, the pioneering hedonic price analysis dates hack to a 1939 article by Andrew Court which receives, at best, only perfunctory citations. This article revisits and extends Court's 1939 analysis. By many standards of contemporary hedonic price analysis, Court's work stands up quite well. It addresses problems at nonlinearity and changes in underlying goods, with circumspect analysis and interpretation. The article evaluates Court's work, extends his analyses using data from his unpublished papers, and conjectures as to why the hedonic price method was unused for so many years. Cheshire, Paul; Sheppard, Stephen, "Estimating the Demand for Housing, Land, and Neighbourhood Characteristics," Oxford Bulletin of Economics and Statistics; 60(3), August 1998, pages 357-82. Abstract: This paper provides estimates of the structure of demand for individual housing and neighborhood characteristics and for land in two British cities. The authors estimate a hedonic price function, and from this obtain the implicit prices of house attributes. These prices are used to estimate a demand system for each city. These perform well, and enable them to calculate price and income elasticities for each of the nondichotomous characteristics and for land. To counteract criticisms of demand estimates derived within the hedonic framework a method is developed for selecting an appropriate set of instrumental variables. Estimates derived from this method, however, differ only slightly from those obtained using the conventional techniques. Several features of these estimates provide insights into the unusual characteristics of the British housing market, the effects of constraints imposed by land use planning, and the effects of changing income distribution on the structure of demand. Macedo, Paulo Brigido Rocha, "Hedonic Price Models with Spatial Effects: An Application to the Housing Market of Belo Horizonte, Brazil," Revista Brasileira de Economia; 52(1), Jan. March 1998, pages 63-81. Abstract: This paper uses both standard and spatial autoregressive hedonic price models (HPM) to analyze sample data from the housing market of Belo Horizonte, Brazil. Among the spatial econometric tools used are diagnostic tests for the detection of spatial dependence and heterogeneity, which provide the means to identify adjacency effects in the determination of housing prices. The study tests also a number of alternative functional forms for both the standard and the spatial HPM using the Box Cox transformation of the variables analyzed. The results show that spillover (adjacency) are an important source of price variation in the housing market analyzed, and the doublelog specification provides the best fit in describing the relationship between housing prices and attributes. Yatchew, Adonis, "Nonparametric Regression Techniques in Economics," Journal of Economic Literature; 36(2), June 1998, pages 669-721. Abstract: This introduction to nonparametric regression emphasizes techniques that might be most accessible and useful to the applied economist. The paper begins with a brief overview of the class of models under study and central theoretical issues such as the curse of dimensionality, the bias variance trade off and rates of convergence. The paper then focuses on kernel and nonparametric least squares estimation of the nonparametric regression model, and optimal differencing estimation of the partial linear model. Constrained estimation and hypothesis testing is also discussed. Empirical examples include returns to scale in electricity distribution and hedonic pricing of housing attributes. Bollinger, Christopher R.; Ihlanfeldt, Keith R.; Bowes, David R., "Spatial Variation in Office Rents within the Atlanta Region," Urban Studies; 35(7), June 1998, pages 1097-1118. Abstract: Hedonic office rent models are estimated using data for Atlanta that span the years 1990-96. Controlling for typical building characteristics and lease terms, we find that variables measuring locational differences in wage rates, transport rates and proximity to concentrations of support services and office workers play an important role in explaining spatial variation in office rents. No evidence is found in support of the hypothesis that technological advances in telecommunications have diminished the role played by face to face agglomeration economies in determining the intra metropolitan location of office firms. Stewart, Kenneth G.; Jones, J. C. H., "Hedonics and Demand Analysis: The Implicit Demand for Player Attributes," Economic Inquiry; 36(2), April 1998, pages 192-202. Abstract: Although a significant econometric literature is concerned with the implicit demand for the attributes of differentiated goods in hedonic pricing models, the literature has developed independently of modern econometric demand analysis. This study estimates factor demand systems using data on player characteristics employed by Major League Baseball teams and associated estimated hedonic prices. It is found that the implicit demand for player attributes by teams is largely consistent with the predictions of the neoclassical theory of the firm, in contrast to the results often obtained by empirical demand studies using conventional data sets. Shi, Hongqi; Price, David W., "Impacts of Sociodemographic Variables on the Implicit Values of Breakfast Cereal Characteristics," Journal of Agricultural and Resource Economics; 23(1), July 1998, pages 126-39. Abstract: The implicit values of nutrient and nonnutrient characteristics of breakfast cereal were estimated using the 1987-88 household portion of the USDA's Nationwide Food Consumption Survey data. The effects of sociodemographic variables on cereal characteristic values were also estimated. The conceptual framework of the hedonic price model, used for food products, has traditionally focused on the nutritional characteristics of these products. This framework was extended to incorporate nonnutritional characteristics. Findings indicate that consumers' sociodemographic characteristics significantly affect the implicit values of both nutritional and nonnutritional cereal characteristics. Results generally met with prior expectations. Schwann, Gregory M., "A Real Estate Price Index for Thin Markets," Journal of Real Estate Finance and Economics; 16(3), May 1998, pages 269-87. Abstract: This article examines a time series based method for estimating real estate price indexes for markets that have few transactions. The proposed method is more parsimonious than the conventional repeat sale or hedonic methods. Also, it is potentially more accurate and less prone to outliers. It achieves this by linking current transactions to preceding transactions, thereby increasing the set of comparable transactions on which to base the index. My experiments confirm that the time series price index fares much better in thin markets than a benchmark hedonic index. It remains close to the true index when there are few transactions and it does not have the volatility of the benchmark index. While the time series based index developed in this article does better than the benchmark hedonic index, one surprise result is that the hedonic index is itself quite robust in small samples. Craig, Lee A.; Palmquist, Raymond B.; Weiss, Thomas, "Transportation Improvements and Land Values in the Antebellum United States: A Hedonic Approach," Journal of Real Estate Finance and Economics; 16(2), March 1998, pages 173-89. Abstract: We offer county level estimates of the effect of water and rail access on the value of antebellum farms. Employing a hedonic model, we find that in 1850 average farm values in counties with access to a canal or navigable river were $2.68 per acre greater than counties without such access and $1.80 greater with rail access. In 1860 the figures were $3.75 for a canal or river access and $1.35 for rail. With average farm size around two hundred acres and per capita national income roughly $150 during the decade, we conclude that on average transportation access yielded substantial economic gains. Liu, Jin Tan; Sheu, Ji Tian, "Perceived Risk and Wage Compensation: An Empirical Study of Petrochemical Workers in Taiwan. (In Japanese. With English summary.)," Academia Economic Papers; 26(1), March 1998, pages 51-69. Abstract: This paper examines the relationship between wages and health risks in petrochemical firms in Taiwan. We compare workers' wages to their perceived job risks, including nonfatal accident risks and chronic disease risks. The results indicate that workers in risky jobs do, ceteris paribus, receive extra wage compensation. The value of disabling injury derived from a hedonic wage function, is NT$225,000 in 1995 dollars. We also find a positive relationship between quitting intentions and perceived job risk. Kniesner, Thomas J. (Reviewer), "Review of: Safety first: Technology, labor, and business in the building of American work safety 1870-1939," Journal of Economic Literature; 36(2), June 1998, pages 980-981. Book: Aldrich, Mark. Safety first: Technology, labor, and business in the building of American work safety 1870-1939. Baltimore and London: Johns Hopkins University Press, 1997. [ISBN: 0 8018 5405 9] Colwell, Peter F.; Munneke, Henry J.; Trefzger, Joseph W., "Chicago's Office Market: Price Indices, Location and Time," Real Estate Economics; 26(1), Spring 1998, pages 83-106. Abstract: Conventional wisdom holds that overbuilding and high vacancy, coupled with curtailed tax benefits, have led to reduced office property values since the late 1980s. Yet assertions that office real estate values fell between the mid 1980s and mid 1990s are not supported everywhere by convincing evidence. This study offers a hedonic analysis of Chicago area office properties that sold from 1986 through 1993. Whereas earlier office market studies generally have been based on rents, this study focuses on variation in actual sale prices (although the prices were not adjusted for financing differences). The transaction based index estimated here does not support the existence of a nominal office property price level decline beginning in the mid to late 1980s. In fact, the results show an upward trend in office property values after 1986, with nominal declines in office market price levels occurring only in the latter portion of the study period. Goodman, Allen C.; Thibodeau, Thomas G., "Dwelling Age Heteroskedasticity in Repeat Sales House Price Equations," Real Estate Economics; 26(1), Spring 1998, pages 151-71. Abstract: Several authors have attributed the heteroskedasticity observed in repeat sales house price equations to the length of time between sales. Recently, Goodman and Thibodeau (1995) developed a theoretical model that relates heteroskedasticity in hedonic house price equations to dwelling age. Using data for nearly 2,000 repeat sales in Dallas, Texas, this research examines whether repeat sales heteroskedasticity is related to dwelling age, to the length of time between sales, or to both. An iterative generalized least squares procedure that explicitly models the residual variance is used to obtain robust parameter estimates and to increase the efficiency of the usual repeat sales price indices. Clapp, John M.; Giaccotto, Carmelo, "Price Indices Based on the Hedonic Repeat Sales Method: Application to the Housing Market," Journal of Real Estate Finance and Economics; 16(1), January 1998, pages 5-26. Abstract: Shiller (1993) proposes the hedonic repeated measures (HRM) approach to measuring constant quality price indices for heterogeneous assets such as some bonds and real estate. We derive a mathematical relationship between the coefficients of the HRM model and those from the standard repeat sales model, and we demonstrate how hedonic characteristics should be chosen for inclusion in the HRM model. Empirical estimates using Fairfax, Virginia, housing transactions data show that the HRM price index evaluated at the mean of the hedonic variable is virtually identical to the standard repeat sales index, just as predicted by our mathematical relationship. But the HRM allows estimation of different price paths for heterogeneous assets. We demonstrate that use of assessed value as the only hedonic characteristic allows parsimonious HRM estimates. Benson, Earl D. et al., "Pricing Residential Amenities: The Value of a View," Journal of Real Estate Finance and Economics; 16(1), January 1998, pages 55-73. Abstract: This study provides estimates of the value of the view amenity in single family residential real estate markets. A focus on Bellingham, Washington, a city with a variety of views, including ocean, lake, and mountain, allows for differentiation of the view amenity by both type and quality. Results from a hedonic model estimated for several recent years suggest that depending on the particular view, willingness to pay for this amenity is quite high. The highest quality ocean views are found to increase the market price of an otherwise comparable home by almost 60%; the lowest quality ocean views are found to add about 8%. For ocean views of all quality levels, the value of a view is found to vary inversely with distance from the water. Gatzlaff, Dean H.; Haurin, Donald R., "Sample Selection and Biases in Local House Value Indices," Journal of Urban Economics; 43(2), March 1998, pages 199-222. Abstract: Analysis of cross sectional or intertemporal variations in house values among localities requires reliable house value indices. However, prior studies applying the hedonic method to transaction data have reported price series that may be biased. This paper investigates a possible cause of bias and uses a censored regression technique extended to an intertemporal model to derive an unbiased index. The authors apply their method to 1971-91 data from the Miami, Florida, MSA and find evidence in time varying amounts of bias. The authors' results suggest that prior studies using the hedonic method and samples consisting only of sold houses have understated the intertemporal variability of house prices. Chattopadhyay, Sudip, "An Empirical Investigation into the Performance of Ellickson's Random Bidding Model, with an Application to Air Quality Valuation," Journal of Urban Economics; 43(2), March 1998, pages 292- 314. Abstract: This paper compares B. Ellickson's (1981) random bidding model to the standard hedonic model in estimating benefits due to marginal and nonmarginal changes in housing attributes. Using data on the Chicago housing market, the paper shows that the benefit estimates obtained using the two models are very close. In addition, various categorizations based on household characteristics are tested in the case of the random bidding model. The study shows that the effect of categorization on the overall benefit estimates are negligible. Moreover, the results from the random bidding model reveal that increased income leads to greater demand for environemtal quality. Dulberger, Ellen R. (Reviewer), "Review of: The economics of new goods," Journal of Economic Literature; 36(1), March 1998, pages 243-244. Book: Bresnahan, Timothy F.; Gordon, Robert J., eds. The economics of new goods. National Bureau of Economic Research (NBER) Studies in, Income and Wealth, vol. 58. Chicago and London: University of Chicago Press, 1997. [ISBN: 0 226 07415 3]

Magat, Wesley A. (Reviewer), "Review of: Evaluating health risks: An economic approach," Journal of Economic Literature; 35(1), March 1997, 152-153.

Abstract: This concise and carefully written book addresses what is becoming an increasingly important issue in several fields of economics, that of assessing the value of improvements in health, or equivalently, of reductions in the risks from diseases, injuries, and other forms of reduced health status. Consider just a few examples. The wise investment in medical services in a community, or in medical research, must be guided by the values that citizens place on avoiding or recovering from different diseases. Pharmaceutical companies are being asked to justify drug based approaches to disease management on the basis of the health benefits that their products provide. And litigation over environmental and natural resource damages regularly depends on estimates of the damages, many of which take the form of health impairment.
    Because of its focus on using preference data to assess the monetary values people place on reducing health risks, this text fills a gap in several areas of the economics literature. Health economics tends to rely upon nonmonetary values of improved health status using measures such as qalys (quality adjusted life years) and hyes (healthy years equivalents). Environmental economics books, even those that focus on benefits, cover a much broader array of benefits than those affecting health, thus ignoring some important theoretical as well as empirical issues characteristic of health risk valuation. Finally, while the general topic of benefit valuation is critical to treatments of benefit cost analysis in public finance, the specific issues involved in valuing health risks are not.
    This text is directed toward two primary audiences, first as a text for doctoral courses in health economics, environmental economics, and public finance, and second as a reference for researchers and practitioners working on conceptual or applied issues in valuing changes in health risks. Because of its primary focus as a specialized text for doctoral courses, noneconomists will find the economic theory to be fairly demanding in several places, although the technical sections can easily be skipped and many of the most mathematically dense extensions and proofs are placed in appendices. ....
  Palmquist, Raymond B.; Roka, Fritz M.; Vukina, Tomislav, "Hog Operations, Environmental Effects, and Residential Property Values," Land Economics; 73(1), February 1997, 114-24. Abstract: A hedonic study of rural residential house sales in southeastern North Carolina was conducted to determine the effect of large scale hog operations on surrounding property values. An index of hog manure production at different distances from the houses was developed. It was found that proximity caused a statistically significant reduction in house prices of up to 9 percent depending on the number of hogs and their distance from the house. The effect on the price of a house from opening a new operation depended on the number of hogs already in the area. Beron, Kurt J. et al., "An Analysis of the Housing Market before and after the 1989 Loma Prieta Earthquake," Land Economics; 73(1), February 1997, 101-13. Abstract: Residential housing sales data from the San Francisco Bay area are merged with earthquake hazard measures, geologic measures, neighborhood quality measures, and community characteristics in order to estimate the hedonic price of earthquake risk before and after the October 17, 1989, Loma Prieta earthquake. The estimates suggest that the hedonic price fell after the earthquake, indicating that consumers had initially overestimated the earthquake hazard. This suggests that information about earthquake risks is imperfect and that some efficiency may be realized by devoting more resources to earthquake risk communication. Can, Ayse; Megbolugbe, Isaac, "Spatial Dependence and House Price Index Construction," Journal of Real Estate Finance and Economics; 14(1 2), Jan. March 1997, 203-22. Abstract: Accurate estimation of prevailing metropolitan housing prices is important for both business and research investigations of housing and mortgage markets. This is typically done by constructing quality adjusted house price indices from hedonic price regressions for given metropolitan areas. A major limitation of currently available indices is their insensitivity to the geographic location of dwellings within the metropolitan area. Indices are constructed based on models that do not incorporate the underlying spatial structure in housing data sets. In this article, we argue that spatial structure, especially spatial dependence latent in housing data sets, will affect the precision and accuracy of resulting price estimates. We illustrate the importance of spatial dependence in both the specification and estimation of hedonic price models. Assessments are made on the importance of spatial dependence both on parameter estimates and on the accuracy of resulting indices.
  Meese, Richard A.; Wallace, Nancy E., "The Construction of Residential Housing Price Indices: A Comparison of Repeat Sales, Hedonic Regression and Hybrid Approaches," Journal of Real Estate Finance and Economics; 14(1 2), Jan. March 1997, 51 73.

Gatzlaff, Dean H.; Haurin, Donald R., "Sample Selection Bias and Repeat Sales Index Estimates," Journal of Real Estate Finance and Economics; 14(1-2), Jan. March 1997, 33-50.

 Abstract: Analysis of variations in house values among localities requires reliable house value indices. Gatzlaff and Haurin (1994) indicate that traditional hedonic house value index estimates, using only information from a sample of sold homes to estimate value movements for the entire housing stock, may be subject to substantial bias. This article extends previous work by adapting the censored sample procedure to the repeat sales index estimation model. Using data from Dade County, Florida, a house value index constructed from a sample of homes selling more than once, rather than all houses in a locality, is found to be biased. The bias is shown to be highly correlated with changes in economic conditions.


Dickie, Mark; Delorme, Charles D., Jr.; Humphreys, Jeffrey M., "Hedonic Prices, Goods Specific Effects and Functional Form: Inferences from Cross Section Time Series Data," Applied Economics; 29(2), February 1997, 239-49.
 

Gegax, Douglas; Stanley, Linda R., "Validating Conjoint and Hedonic Preference Measures: Evidence from Valuing Reductions in Risk," Quarterly Journal of Business and Economics; 36(2), Spring 1997, 31-54.

Abstract: Economists and marketers have relied on different estimation methods for measuring consumer preferences. We attempt, first, to show that a marketing tool, conjoint analysis can be useful for economists in situations where hedonic estimation fails. Second, we examine convergent and theoretical validity of conjoint measures. We apply conjoint analysis to measuring workers' preferences for on the job risk. Using survey data, we obtain marginal value of safety (MVS) estimates using hedonic and conjoint techniques for four job types. The lack of a significant difference between the hedonic and conjoint MVS estimates supports convergent validity. Theoretical validity is supported because the utility function estimated from the conjoint data conforms to expectations derived from theory. The failure of hedonics to produce MVS estimates in low risk/nonunionized jobs combined with the support of conjoint validity suggest that conjoint analysis may be superior in assessing the MVS in all job types. Delgado, Miguel A.; Kniesner, Thomas J., "Count Data Models with Variance of Unknown Forms: An Application to a Hedonic Model of Worker Absenteeism," Review of Economics and Statistics; 79(1), February 1997, 41-49. Abstract: The authors examine an econometric model of counts of worker absences due to illness in a sluggishly adjusting hedonic labor market. They compare three estimators that parameterize the conditional variance least squares, Poisson, and negative binomial pseudo maximum likelihood to generalized least squares (GLS) using nonparametric estimates of the conditional variance. The authors' data support the hedonic absenteeism model. Semiparametric GLS coefficients are similar in sign, magnitude, and statistical significance to coefficients where the mean and variance of the errors are specified ex ante. In their data, coefficient estimates are sensitive to a regressor list but not to the econometric technique, including correcting for possible heteroskedasticity of unknown form. Gonzalez, Marco Aurelio Stumpf; Formoso, Carlos Torres, "Estimacion de Modelos de Precios Hedonicos para Alquileres Residenciales." (With English summary.), Cuadernos de Economia; 34(101), April 1997, 71-86. Abstract: This article describes a research which purpose was finding multiple variable statistic models that explained value formation of housing rent in Porto Alegre, Brasil. The sample was composed by apartments offered in July 1992 from the universe of all the offer in that period. From the total of 1.819 units, 504 were selected, in which the characteristics like building and neighboring conditions were investigated, complemented with information of public institutions. The data obtained were tested by factor and regression analysis, with the compilation of econometric (hedonic) models, at several aggregation levels. The analysis demonstrated that market can be explained by these models, who present meaningful differences, according data selection, but permit the alignment of models for all dwellings and a better understanding of real estate market operation. Huh, Serim; Kwak, Seung Jun, "The Choice of Functional Form and Variables in the Hedonic Price Model in Seoul," Urban Studies; 34(7), June 1997, 989-98. Abstract: This study demonstrates that the important part of exploring the proper functional form of the hedonic price model would include investigating a dissimilar and unique hedonic price structure when the hedonic price model is applied to different housing markets. Based on the adjustment to the usual technique necessitated by the regional and cultural setting of Seoul, the criteria for significance of implicit price, root mean square percentage error and the log likelihood ratio test are applied to the choice of a useful functional form. We conclude that investigating the structure of a local housing market and choosing proper variables reflecting regional and cultural characteristics, both key parts of such a study, require significant adjustment to the reality of Seoul. Pace, R. Kelley; Gilley, Otis W., "Using the Spatial Configuration of the Data to Improve Estimation," Journal of Real Estate Finance and Economics; 14(3), May 1997, 333-40. Abstract: Using the well known Harrison and Rubinfeld (1978) hedonic pricing data, this manuscript demonstrates the substantial benefits obtained by modeling the spatial dependence of the errors. Specifically, the estimated errors on the spatial autoregression fell by 44% relative to OLS. The spatial autoregression corrects predicted values by a nonparametric estimate of the error on nearby observations and thus mimics the behavior of appraisers. The spatial autoregression, by formally incorporating the areal configuration of the data to increase predictive accuracy and estimation efficiency, has great potential in real estate empirical work.
  Tiwari, Piyush; Parikh, Jyoti, "Demand for Housing in the Bombay Metropolitan Region," Journal of Policy Modeling; 19(3), June 1997, 295-321. Abstract: We estimate the demand function of housing for Bombay Metropolitan Region in a two step econometric analysis. The first step estimates the hedonic price index for different regions in Bombay, and in the second step the demand for housing is estimated as a function of economic and household characteristics. The results indicate that housing demand is inelastic with respect to income and price. The income elasticities for owners and tenants are around 0.33 and 0.38, respectively, while the price elasticities are 0.21 and 0.75, respectively, for owners and tenants. We also estimate income and price elasticities for different income classes. The paper concludes with policy prescriptions.
  Ready, Richard C.; Berger, Mark C.; Blomquist, Glenn C., "Measuring Amenity Benefits from Farmland: Hedonic Pricing vs. Contingent Valuation," Growth and Change; 28(4), Fall 1997, 438-58. Abstract: The amenity value to Kentucky residents from horse farm land was estimated using both the contingent valuation method and the hedonic pricing method. The hedonic pricing model included both the housing and labor markets. A value function estimated from dichotomous choice contingent valuation responses showed that the value of a change in the level of the horse farm amenity was sensitive to the size of the change, with no evidence of value that is independent of the size of the change. The two methods generated estimates of the external benefits from horse farm land that were within 20 percent of each other. Goodman, Allen C.; Thibodeau, Thomas G., "Dwelling Age Related Heteroskedasticity in Hedonic House Price Equations: An Extension," Journal of Housing Research; 8(2), 1997, 299-317. Abstract: In an earlier article, we used an iterative generalized least squares procedure with an explicit model for the residential variance to examine whether the residual variance in hedonic house price equations is systematically related to dwelling age. We related transaction price to dwelling size, dwelling age, and period of sale. Our model (using data for 8,476 sales of single family homes in Dallas during 1984 and 1985) explained more than 80 percent of the variance in the logarithm of prices. This article extends our earlier work. First, we incorporate additional structural characteristics into the hedonic specification. Second, we control for neighborhood characteristics by using elementary school boundaries to define submarkets, and we examine submarket heteroskedasticity for single family homes sold between the fourth quarter of 1991 and the first quarter of 1993. We find compelling evidence of dwelling age related heteroskedasticity for half the submarkets examined and for all ares combined.
  Andoh, Katsumi; Ohta, Makoto, "A Hedonic Analysis of Land Prices in Yamanashi Prefecture, Japan," Review of Urban and Regional Development Studies; 9(2), Autumn 1997, 146-58. Abstract: This paper presents a hedonic analysis of residential land prices in Yamanashi Prefecture for the period 1985 1995. The main purpose is to divide Yamanashi Prefecture (including selected attached areas) into Tokyo influenced and Kofu influenced areas. This was accomplished by finding the minimum sum of squared residuals following two hedonic regressions. One regression uses access to Tokyo Station, the other access to Kofu Station. We find that the Tokyo influenced area expanded during the period studied.
  Jensen, Mark J.; Leven, Charles L., "Quality of Life Central Cities and Suburbs," Annals of Regional Science; 31(4), September 1997, 431-49. Abstract: This study shows that there has been a statistically significant shift in the quality of life (QOL) in central cities of the 25 largest metro areas relative to their suburbs since 1980. This follows actual improvement of central cities in the '50s, followed by steady degradation in the '60s and '70s. These conclusions are based on a statistical analysis of key variables derived from a revealed preference conception of QOL. This is an important methodological advance, since relevant variables for directly constructing hedonic measures of QOL normally are unavailable for central cities. The basic Census data used in the analysis also indicate that the observed "turnaround" is evident without respect to size of metro area within the set of 25 largest and without respect to region of the country. Ireland, Thomas R.; Johnson, Walter D.; Taylor, Paul C., "Economic Science and Hedonic Damage Analysis in Light of Daubert V. Merrell Dow," Journal of Forensic Economics; 10(2), Spring Summer 1997, 139-56. Abstract: The 1993 landmark United States Supreme Court decision in Daubert V. Merrell Dow set out specific criteria for admission of expert testimony. A crucial question for economists raised by the decision is how damage analysis by economists might be impacted by theses new rules. To the extent that the courts have applied Daubert to decisions on the admissibility of economic testimony in the three years since Daubert, it has been almost exclusively in the area of "hedonic damages." In a number of cases, courts have ruled that "hedonic damage" testimony does not meet the requirements of the Daubert decision. Only one has contained even an inference of probable acceptance of "hedonic damages." This paper reviews the cases individually and examines the rationales by which the courts have denied admissibility to "hedonic damage" testimony in an attempt to garner insight into the potential impact of Daubert on testimony by economic experts. Aguirre, Antonio; de Faria, Diomira M. C. P., "A utilizacao de "precos hedonicos" na avaliacao social de projetos." (With English summary.), Revista Brasileira de Economia; 51(3), July Sept. 1997, 391-411. Abstract: This paper discusses the so called hedonic prices . A review of the literature is provided together with an application in the area of social project evaluation. The particular case studied refers to the evaluation of the benefits generated by an investment project in the city of Sao Paulo, The specification and the estimation of the uniequational hedonic regression model are discussed. The Box and Cox transformation is used to select the "best form of the relation. After estimation, the coefficients are interpreted in the light of the hedonic price theory, and the results are discussed. Hoyt, William H.; Rosenthal, Stuart S., "Household Location and Tiebout: Do Families Sort According to Preferences for Locational Amenities?," Journal of Urban Economics; 42(2), September 1997, 159-78. Abstract: If households sort efficiently across locations, then at a given location families receive the same marginal benefit from the locational amenities. The authors test for such sorting by imposing cross equation restrictions on hedonic regressions that difference away location versus house specific effects. Estimates are obtained using a unique subset of the American Housing Survey in which adjacent housing units are grouped together and observed in both 1985 and 1989. Rejection of the cross equation restrictions unambiguously implies an inefficient sorting of households. In contrast, the data support the cross equation restrictions which is a necessary but not sufficient condition for efficient sorting. Cragg, Michael; Kahn, Matthew, "New Estimates of Climate Demand: Evidence from Location Choice," Journal of Urban Economics; 42(2), September 1997, 261-84. Abstract: The authors develop and apply to Census data a new method for estimating climate demand. The method is useful for ranking quality of life based upon a willingness to pay criterion. Their two major findings are that the willingness to pay quality of life index is correlated with the hedonic approach's ranking but that the migration approach generates much larger estimates of willingness to pay for a more moderate climate. This finding is relevant for evaluating the economic impact of global warming. Lee, Karen Jean, Hedonic Estimation of Nonindustrial Private Forest Landowner Amenity Values, North Carolina State University, Ph.D. 1997
 

Crane, Randall; Daniere, Amrita; Harwood, Stacy, "The Contribution of Environmental Amenities to Low Income Housing: A Comparative Study of Bangkok and Jakarta," Urban Studies; 34(9), August 1997, 1495-1512.

Abstract: Central and local governments and their creditors are increasingly interested in cost recovery for public services. These strategies have two aims increasing revenues and making a better connection between benefits received and consumer bills. This paper estimates a hedonic model for household level data in a rare contrast of slums in two Asian mega cities to provide comparative information about how the poor value environmental amenities and basic infrastructure access. The results suggest that slum housing prices do reflect differentials in public service access and that rough estimates of the value of access can be cheaply and usefully obtained for planning purposes. Clark, David E.; Herrin, William E., "Historical Preservation Districts and Home Sale Prices: Evidence from the Sacramento Housing Market," Review of Regional Studies; 27(1), Summer 1997, 29-48. Abstract: During the past two decades, cities have turned increasingly to historic preservation of residential and commercial property as a method to help revive declining metropolitan areas. Sacramento, California, established historical preservation districts in an attempt to protect and maintain older structures while simultaneously increasing their value. Historic preservation, however, imposes strict rules on property owners that make property improvement more expensive than it otherwise would be. This paper uses hedonic price theory on a sample of residential properties in Sacramento to test whether positive externalities resulting from an historic preservation designation outweigh the potential negative impact of a cumbersome set of rules. The findings suggest that an historic preservation designation has a net positive impact on property values in four of the six preservation districts in the sample. Asabere, Paul K.; Huffman, Forrest E., "Hierarchical Zoning, Incompatible Uses and Price Discounts," Real Estate Economics; 25(3), Fall 1997, 439-51. Abstract: This study examines an aspect of hierarchical zoning. Hierarchical zoning, unlike mutually exclusive zoning, is unidirectional in that it protects upper level residential uses from nonconforming, non residential uses but not vice versa. The result is that the lower level zones can be a mixture of several nonconforming incompatible uses. This unique attribute of hierarchical zoning offers a window of opportunity for choices for affordable housing at affordable locations. Using hedonic analysis, empirical evidence shows that huge price discounts (over 15%) are associated with apartments that are situated in nonconforming zones. Arguments here support more flexible zoning. Liu, Jin Tan; Hammitt, James K.; Liu, Jin Long, "Estimated Hedonic Wage Function and Value of Life in a Developing Country," Economics Letters; 57(3), December 1997, 353-58. Abstract: This paper reports the first study of compensating wage differentials for work related fatalities in a developing country. Using data from the 1982 1986 Taiwan labor surveys, statistically significant compensating wage differentials are found. The implied value of life is US $413,000 (corrected for selectivity bias) and US $461,000 (uncorrected) in 1990 dollars. Wooldridge, Jeffrey M., "Estimating Systems of Equations with Different Instruments for Different Equations," Journal of Econometrics; 74(2), October 1996, 387-405. Abstract: For applications where different instruments are required for different equations, this paper offers a relatively primitive set of assumptions under which the nonlinear three stage least squares estimator is the asymptotically efficient generalized method of moments estimator. These conditions can be verified for a general class of panel data models under reasonable assumptions about the dynamics in the model. On the other hand, the three stage least square estimator is necessarily inefficient for models such as hedonic price systems and for certain simultaneous equations models with measurement error or omitted variables in some equations. Gat, Daniel, "A Compact Hedonic Model of the Greater Tel Aviv Housing Market," Journal of Real Estate Literature; 4(2), July 1996, 163-72. Abstract: Hedonic models have been used extensively in the economic analysis of multiattribute products in general, with housing as an especially favored focus. Hedonic housing models have two major ends: (1) to explore the relative importance and explanatory power of various housing attributes and (2) to assess the value of specific housing units in the absence of actual market transactions. This paper is of the first type. While complete data are never available, researchers have tended to look for more, rather than fewer, explanatory variables. Taking advantage of a previously computed socioeconomic index (SEI) of neighborhoods, this research proposes a minimal data set of just two predictor variables. Greater Tel Aviv recent housing prices are regressed onto two locational variables: the first, SEI, is used as a proxy for neighborhood quality, and the second represents employment accessibility. Taken together, the two attributes explain nearly three quarters of the spatial price variation. Boulding, William; Purohit, Devavrat, "The Price of Safety," Journal of Consumer Research; 23(1), June 1996, 12-25. Abstract: This article presents a simple economic model to assess consumers' valuation of safety features. In particular, we model the benefit from safety as the reduction in the probability of death and the associated economic value of this reduction. We then apply this theoretical model to investigate market valuation of antilock brakes and airbags via the specification and estimation of a hedonic price equation. Results indicate that consumers behave in a manner consistent with the economic model we develop. Kawawaki, Yasuo; Ota, Mitsuru, "The Influence of the Great Hanshin Awaji Earthquake on the Local Housing Market," Review of Urban and Regional Development Studies; 8(2), July 1996, 220-33. Abstract: The Great Hanshin Awaji Earthquake destroyed a huge number of houses and caused housing problems in the disaster area. This paper investigates the influence of the earthquake on the related housing market, mainly in terms of changes in house prices and housing rents, and analyzes the mechanism of the changes. Empirical results by hedonic analyses indicate the influences are different between house prices and housing rents and also between the disaster district and the surrounding area. Those differences are explained by the factors of the earthquake that would affect the housing market, such as decrease in income, diversity of damage among the districts and others. Englin, Jeffrey, "Estimating the Amenity Value of Rainfall," Annals of Regional Science; 30(3), September 1996, 273-83. Abstract: The amenity value of two measures of rainfall are investigated in this study: long term average annual rainfall and the variation in rainfall within the year. Estimates of the economic value of rainfall and variation in rainfall are found using the hedonic property value technique. The results indicate that rainfall is an attribute for which the distribution as well as the average annual level is important. Home buyers prefer less annual rainfall, but, holding annual rainfall constant, buyers will also pay more for greater seasonal variation in rainfall. Dorfman, Jeffrey H.; Keeler, Andrew G.; Kriesel, Warren, "Valuing Risk Reducing Interventions with Hedonic Models: The Case of Erosion Protection," Journal of Agricultural and Resource Economics; 21(1), July 1996, 109-19. Abstract: This article extends the literature on economic valuation of public interventions that reduce environmental risk. We consider the case where risk reducing interventions have different characteristics than the risk proxies used in hedonic regressions. We then demonstrate the importance of these considerations by re examining an existing analysis of shoreline protection where we estimate risk using a latent variables model. The results show substantially different and arguably more plausible results. Margo, Robert A., "The Rental Price of Housing in New York City, 1830-1860," Journal of Economic History; 56(3), September 1996, 605-25. Abstract: Advertisements from antebellum New York City newspapers are used to estimate hedonic indices of the rental price of housing. Rents varied with the quality of housing and its location, suggesting a well defined market for rental housing. Controlling for housing characteristics and location, the relative price of housing rose between 1830 and 1860. Bejranonda, Somskaow, An Assessment of the Soil Erosion Impacts on Lakeside Property Values in Ohio: A Hedonic Pricing Method (HPM) Application, Ohio State University, Ph.D. 1996
 

Smith, V. Kerry, Estimating economic values for nature: Methods for non market valuation, New Horizons in Environmental Economics series. Cheltenham, U.K.: Elgar; distributed by Ashgate, Brookfield, Vt., 1996.

Abstract: Thirty two previously published papers examine measures of the economic values for the services of nature and how those values are constructed from people's choices. Papers focus on overviews of economic theory and econometric methods of environmental valuation; travel cost recreation demand models; hedonic models; household production models; the contingent valuation method; and the agenda of future research on nonmarket valuation. Forrest, David; Glen, John; Ward, Robert, "The Impact of a Light Rail System on the Structure of House Prices: A Hedonic Longitudinal Study," Journal of Transport Economics and Policy; 30(1), January 1996, 15-29.
 

Hughes, William T., Jr.; Turnbull, Geoffrey K., "Uncertain Neighborhood Effects and Restrictive Covenants," Journal of Urban Economics; 39(2), March 1996, 160-72.

Abstract: This paper provides a theoretical model and empirical analysis of private land use contracts in an urban housing market. One contribution of our analysis lies in the explicit treatment of neighborhood externalities as uncertain processes; the potential resident views the contractual obligation established by deed restrictions as credible commitment by unknown future neighbors to utilize their own property within the defined bounds, thereby reducing the uncertainty or riskiness of future externality effects. Following this view, we present a hedonic valuation model for deed restrictions and neighborhood covenants to tie housing consumption risk theory to the empirical hedonic method. We then use a unique land use contracts data set to test the model implications.
  Conley, Bryan C. (Reviewer), "Review of: Valuing health for policy: An economic approach," Journal of Economic Literature; 34(1), March 1996, 153 154. Abstract: This is a very timely book dealing with one of the usually intractable problems in valuing public programs: the benefit of health outcomes.
    The book is organized into four parts: the first is a comparative analysis of health values, starting with an excellent overview of the literature on cost of illness (medical costs and foregone earnings), on contingent valuation (responses to questionnaires), on hedonic "willingness to pay" studies, and on the studies of Qualy (Quality Adjusted Life Years, in which the benefit is measured in an index of a patient's years of maximum health equivalents). The second part reviews the "Valuation of Common Systems." Part Three looks at "Valuation of Serious Illness" and Part Four examines "Policy." ...
    In Part One the authors compare various methodologies of measuring health benefits listed above with the "willingness to pay" approach which measures benefits with people's actual (or professed, i.e., contingent valuation) willingness to purchase the services rendered. The major theme is that "a cost of illness measure is a lower bound to willingness to pay as revealed by contingent valuation" (pp. 21-22), a conclusion presumably well recognized by economists and similar to the major conclusion of this reviewer in his value of life article (AER, 1976), that is, "intangibles matter a lot."
    Part of the original research findings reported in the book are daily mean willingness to pay figures from the authors' contingent valuation study. These values range from $38.84 for relief of sinus congestion to $173.89 for relief from heavy drowsiness (p. 99) in 1984 85 values. ...
  Shabman, Leonard; Stephenson, Kurt, "Searching for the Correct Benefit Estimate: Empirical Evidence for an Alternative Perspective," Land Economics; 72(4), November 1996, 433-49. Abstract: This paper contrasts the results of the contingent valuation, hedonic price, and property damages avoided valuation techniques. Each technique was used to estimate the value of flood risk reduction from the construction of a flood control project. Voting behavior in a referendum called specifically for the provision of the project was used to further interpret the results from the three valuation studies. Substantial differences were found between the estimates. In explaining these differences, an alternative perspective on the current debate over the validity and accuracy of nonmarket value estimates is offered. Gencay, Ramazan; Yang, Xian, "A Forecast Comparison of Residential Housing Prices by Parametric versus Semiparametric Conditional Mean Estimators," Economics Letters; 52(2), August 1996, 129-35. Abstract: The hedonic price model involves examining how the price of a commodity varies with the set of characteristics it possesses and has been used extensively in the housing market literature. The majority of the previous literature has concentrated on the parametric specifications of the hedonic price model by estimating econometric specifications such as ordinary least squares or Box Cox models; all restrict the functional form and interaction between regressors. Recent evidence suggests that non parametric and semiparametric techniques fit the data substantially better than the parametric specifications. Here, the parsimony of the parametric and semiparametric hedonic price models are examined by their out of sample forecast comparisons. The evidence presented here reveals that the semiparametric model provides the smallest out of sample mean square prediction error in comparison with the parametric specifications such as the ordinary least squares regression, the Box Cox and the Wooldridge transformations. The results of this paper suggest that semiparametric regression can be successfully used for prediction and assessment of residential housing prices. Figueroa B., Eugenio; Rogat C., Jorge; Firinguetti L., Luis, "An Estimation of the Economic Value of an Air Quality Improvement Program in Santiago de Chile," Estudios de Economia; 23(0), Special Issue 1996, 99-114. Abstract: There is no doubt regarding the negative effects of air pollution on human health, economic property and the environment. The almost five million inhabitants living in Santiago, Chile, are exposed to high levels of air contamination, especially during winter time when the level of pollution is at its worst. In this paper, a hedonic price model is used to first, estimate the effect of air pollution on house prices in Santiago and second, to estimate the willingness to pay (WTP) for a program that reduces air contamination by 50 percent. The data consists of 992 observations containing market prices for houses and their characteristics. The average WTP for the air quality improvement program was estimated in $567,000 (US $1,626), and the aggregated WTP for Santiago in almost 600 billion pesos (US $1.7 billion). Michalland, Beatrice, "Evaluation de la fonction de demande en eau d'irrigation et application de la methode des prix hedonistes." (Evaluation of Irrigation Water Demand and Application of the Hedonic Price Method. With English summary.), Cahiers d'Economie et Sociologie Rurales; 0(39 40), 1996, 199-222. Abstract: The article gives more attention to the hedonic method, which has not yet been used in France to estimate the irrigation water demand function. The numerical application presented is based on data from the Midi Pyrenees region (France). Having no access to a large number of complete individual transaction data, we have preferred to work at a "small agro regional" scale, for which we could gather simultaneously information on the agricultural land market, agronomic potentialities, space organization, irrigation practices. Le Goffe, Philippe, "La methode des prix hedonistes: Principes et application a l'evaluation des biens environnementaux." ("The Hedonic Price Method: Principles and Application to Environmental Goods Valuation." With English summary.), Cahiers d'Economie et Sociologie Rurales; 0(39 40), 1996, 179-98. Abstract: The estimation of the hedonic price function is constrained by many practical problems as definition of pertinent environmental criteria, consumer perception or expectation of environmental change, market segmentation. In addition, econometric problems should be emphasized: model specification and functional form, multicolinearity. Finally hedonic pricing is limited by methodological constraints, but also by the nature of values to be measured (use value only) and the field of application (mainly urban). However, when applied to assets such as noise or air quality in town areas the methodology may bring satisfying results. Anglin, Paul M.; Gencay, Ramazan, "Semiparametric Estimation of a Hedonic Price Function," Journal of Applied Econometrics; 11(6), Nov. Dec. 1996, 633-48. Abstract: Previous work on the preferred specification of hedonic price models usually recommended a Box Cox model. In this paper we note that any parametric model involves implicit restrictions and they can be reduced by using a semiparametric model. We estimate a benchmark parametric model which passes several common specification tests, before showing that a semiparametric model outperforms it significantly. In addition to estimating the model, we compare the predictions of the models by deriving the distribution of the predicted log(price) and then calculating the associated prediction intervals. Our data show that the semiparametric model provides more accurate mean predictions than the benchmark parametric model. Wallace, Nancy E., "Hedonic Based Price Indexes for Housing: Theory, Estimation, and Index Construction," Federal Reserve Bank of San Francisco Economic Review; 0(3), 1996, 34-48. Abstract: Housing price indexes should not confound the effect of changes in quality with the effects of changing house prices. A recent nonparametric regression technique, loess, allows flexible estimation of the hedonic price function and centers the estimation at fixed points, such as the beginning or ending period housing characteristics. Indexes using these estimates are consistent with the requirements of Laspeyres and Paasche price indexes. The technique is used to obtain indexes for fifteen municipalities in Alameda County from 1970:1 through 1995:1. The nonparametric hedonic based indexes provide better controls for the effect of quality evolution on price movements than alternative methods. Mendelsohn, Robert; Shaw, Daigee, eds., The economics of pollution control in the Asia Pacific, New Horizons in Environmental Economics series. Cheltenham, U.K. and Lyme, N.H.: Elgar; distributed by American International Distribution Corporation, Williston, Vt., 1996, xv, 354. Abstract: Fifteen papers, originally presented at a conference organized by the Institute of Economics, Academia Sinica, Taiwan, and held in March 1994, adapt environmental economics to the special situation of the nations of the Asia Pacific region. Papers examine the impact of global warming on Pacific Rim countries; the framework convention and climate change policy in Asia; the impact of climate change on rice yield in Taiwan; acute health effects of major air pollutants in Taiwan; the value of reduced morbidity in Taiwan; hedonic housing values and benefits of air quality improvement in Taipei; the benefit of air quality improvement in Seoul; comparing contingent valuation elicitation techniques of measuring the benefits of air quality improvement in Taipei; the value of drinking water protection in Seoul; the demand for environmental quality and models for contingent policy referendum experiments; hierarchical government, environmental regulations, transfer payments, and incomplete enforcement; pollution regulation in open lobbying economies; the pros and cons of equal rate Pigovian taxes and tradable permits in controlling global pollution; difficulty in enforcing efficient prices for regulating shiftable externalities; and optimal environmental quality improvement in a multi goods R&D growth model. Des Rosiers, Francois; Theriault, Marius, "Rental Amenities and the Stability of Hedonic Prices: A Comparative Analysis of Five Market Segments," Journal of Real Estate Research; 12(1), 1996, 17-36.
 

Maclennan, Duncan; Tu, Yong, "Economic Perspectives on the Structure of Local Housing Systems," Housing Studies; 11(3), July 1996, 387-406.

Abstract: This paper examines the notions of market and sub market in the context of housing. It first proposes specific definitions and then clarifies why the general characteristics of housing are likely to generate sub markets and why these will tend to exhibit disequilibrium of different forms and durations. These sub markets may be sectoral or spatial, or indeed both. Empirical evidence on the existence of sub markets is put forward with respect to certain Scottish cities, using hedonic and other techniques. Finally, the implications of the existence of sub markets for the stability of local housing systems are assessed. Mason, Carl; Quigley, John M., "Non-parametric Hedonic Housing Prices," Housing Studies; 11(3), July 1996, 373-85.
 

Slesinger, Reuben E., "The Demise of Hedonic Damages Claims in Tort Litigation," Journal of Legal Economics; 6(2), Fall 1996, 17-28.

 
Akpom, Uchenna N., "Housing Attributes and the Cost of Private Rental Buildings in Lagos Nigeria: A Hedonic Price Analysis," Review of Regional Studies; 26(3), Winter 1996, 351-65.

Abstract: While the hedonic analysis has been used extensively to analyze the housing markets in developed countries, it has relatively few applications to African housing markets. The need to study housing markets in Africa cannot be overemphasized. This paper presents the results of a hedonic price analysis of the Lagos, Nigeria, housing market A Box Cox transformation technique was employed for the analysis. Implicit prices for housing attributes were estimated to determine their impacts on rental rates in Lagos. The results indicate that both structural and environmental characteristics of a house affect its rent in Lagos. Further, structural characteristics appear to be more important than environmental characteristics in the market studied. These results are generally similar to the results obtained for developed countries, except that environmental attributes seem to be more important in developed countries than this study shows. Some policy implications of the hedonic analysis are briefly discussed. Giannias, Dimitrios A., "A Structural Approach to Hedonic Equilibrium Models," Economic Notes; 25(3), 1996, 499-513. Abstract: Most empirically estimated single equation hedonic functions presume that hedonic prices are dependent only on product characteristics. This paper employs a partially quadratic utility function and makes price vary linearly with a latent quality index. Equating their Marshalian demands with exogenous supplies then determines the endogenous hedonic price. The reduced form of the price equation implies the weights for the linear quality index. Values of "quality" can then be calculated for a specific product and the demand for quality can be modeled as dependent upon consumer income and characteristics. The model is estimated and the reduced form equations for price and quantity identify the underlying utility parameters, which are subsequently used to calculate the compensating variation with improvements in the air quality of Houston.

Mills, Edwin S., Simenauer, Ronald, "New Hedonic Estimates of Regional Constant Quality House Prices," Journal of Urban Economics, 39(2), March 1996, pp. 209-15.

Abstract: This paper employs a new national data set to estimate constant quality dwelling prices for four regions of the country. The data set, collected by the National Association of Realtors, provides sale prices, locations, and characteristics of 5,581 dwellings sold during the years 1986-92 inclusive. The paper provides the first national hedonic analysis based upon transaction prices of sample dwellings. The estimated equation implies that more than half of dwelling price increases during the period resulted from quality improvements in dwellings.

Knight, J. R.; Dombrow, Jonathan; Sirmans, C. F., "A Varying Parameters Approach to Constructing House Price Indexes," Real Estate Economics, 23(2), Summer 1995, pp. 187-205.

Abstract: Conventional housing price index models assume interperiod parameter stability and typically employ either repeat sales or hedonic methodologies. This paper introduces a method of index construction that combines multiple sales observations with single sale transactions while permitting characteristics prices from hedonic regressions to vary over time. A test for interperiod parameter stability is provided. Each period's data are arranged by location and repeat sales are matched by rows. This construction allows greater use of sample information and acknowledges the unique contribution of repeat sales to the estimation process. It also produces intertemporal error correlations that can be beneficially exploited by the seemingly unrelated regressions (SUR) technique. The paper also demonstrates a significance test for error correlation and discusses the treatment of unequal numbers of observations among index periods.

Allen, Marcus T.; Springer, Thomas M.; Waller, Neil G., "Implicit Pricing across Residential Rental Submarkets," Journal of Real Estate Finance and Economics, 11(2), September 1995, pp. 137-51.

Abstract: This paper examines implicit price differences of rental housing characteristics across various property types to measure whether determinants of rents are valued in the aggregate or separately. The results show that hedonic price functions are not identical across property types which suggests that ordinary least squares is not the appropriate estimation technique when modeling the implicit prices for an aggregate rental market. Generalized least squares estimation of a random coefficient model removes the restriction of fixed parameters imposed by OLS and allows estimation of implicit prices for rental markets containing multiple property types.

Casey, James F.; Vukina, Tomislav; Danielson, Leon E., "The Economic Value of Hiking: Further Considerations of Opportunity Cost of Time in Recreational Demand Models," Journal of Agricultural and Applied Economics, 27(2), December 1995, pp. 658-68.

Abstract: The paper tests two alternative specifications for the opportunity cost of time in travel cost models. The standard travel cost survey design is enriched to include a contingent valuation type question about peoples' willingness to accept compensation to forgo a precisely defined recreational experience. It is hypothesized that individually revealed value of time more appropriately reflects the opportunity costs of time associated with a particular aspect of recreation than the wage rate which measures the trade-off between work and leisure, generally. The results seem to indicate a better overall fit for the models with the elicited value of individual consumer's time than for the models with the more traditional hourly earnings (wage rates). The importance of the correct measurement of the opportunity cost time is illustrated by showing that estimated consumer surpluses based on two different value of time measurements differ significantly.

Lansford, Notie H., Jr.; Jones, Lonnie L., "Marginal Price of Lake Recreation and Aesthetics: An Hedonic Approach," Journal of Agricultural and Applied Economics, 27(1), July 1995, pp. 212-23.

Abstract: Efficient allocation of water requires knowledge of water's value in both consumption and nonconsumptive uses. This study estimates the marginal value of water in lake recreational and aesthetic (RA) use. An hedonic price equation (employing the Box-Cox functional form) indicates lake front location, distance to lake, and scenic view are significant RA characteristics of housing Water front properties command a premium price for the private access they offer. Beyond the water front, the marginal RA price falls rapidly with increasing distance, becoming asymptotic to some minimum. Twenty-two percent of housing price is found to be attributable to the RA component.

Kahn, Matthew E., "A Revealed Preference Approach to Ranking City Quality of Life," Journal of Urban Economics, 38(2), September 1995, pp. 221-35.

Abstract: This paper presents a new method for ranking city quality of life. The author uses data from the 1980 and the 1990 Census of Population and Housing to rank cities. His approach relaxes the standard 'hedonic' method's assumptions that all city local public goods are observed and that the implicit prices of all skills and apartment attributes are equal across cities. The author finds that Los Angeles and San Francisco have higher quality of life than Chicago and Houston in both 1980 and 1990. He finds that quality of life in New York City fell during the 1980s.

Shields, Michael P., "Time, Hedonic Migration, and Household Production," Journal of Regional Science, 35(1), February 1995, pp. 117-34.

Abstract: A hedonic migration model is developed where regional amenities are viewed as influencing household production within the framework of the new demand theory. The inputs to household production are goods, time, and housing. It is shown that economic growth in the economy as a whole will increase the relative attractiveness of regions that are relatively time-saving in the sense that they have a lower time elasticity of household production. Hence, migration will flow into time-saving regions and housing costs in those regions will rise as real GDP grows.

Landford, Notie H., Jr.; Jones, Lonnie L., "Recreational and Aesthetic Value of Water Using Hedonic Price Analysis," Journal of Agricultural and Resource Economics, 20(2), December 1995, pp. 341-55.

Abstract: Historically, water allocation focused on quantities demanded by consumptive uses. As quantity demand grows, efficient allocation among consumptive and nonconsumptive uses becomes more critical. This hedonic approach provides information regarding recreational and aesthetic (RA) value for a central Texas lake. The model indicates several statistically significant RA characteristics of housing; proximity is the most important. Waterfront properties command a premium but marginal RA price falls rapidly with increasing distance. Marginal RA values are estimated for selected water levels and are found to have a lower marginal price per acre-foot than many agricultural uses.

Goodman, Allen C.; Thibodeau, Thomas G., "Age-Related Heteroskedasticity in Hedonic House Price Equations," Journal of Housing Research, 6(1), 1995, pp. 25-42.

Abstract: The article examines the relationship between dwelling age and the market value of owner-occupied housing. The article theoretically establishes and empirically verifies that (1) housing depreciation is nonlinear and (2) dwelling age-induced heteroskedasticity is prevalent in hedonic house price equations. The empirical results are obtained with a semilog hedonic house price equation from data on nearly 8,500 transactions of single-family homes in Dallas. Hedonic parameters are estimated with four alternative dwelling age specifications and two iterative generalized least squares estimation procedures that accommodate heteroskedasticity by explicitly modeling the residual variance. Estimated depreciation rates are sensitive to both the dwelling age specification and the estimation procedure. The article establishes the importance of incorporating second-order effects in obtaining accurate point estimates for housing depreciation.

Pace, R. Kelley, "Parametric, Semiparametric, and Nonparametric Estimation of Characteristic Values within Mass Assessment and Hedonic Pricing Models," Journal of Real Estate Finance and Economics, 11(3), November 1995, pp. 195-217.

Abstract: Parametric estimators, such as OLS, attain high efficiency for well-specified models. Nonparametric estimators greatly reduce specification error but at the cost of efficiency. Semiparametric estimators compromise between these dual goals of efficiency and specification error. Semiparametric estimators can assume general forms within classes of functional forms. This paper applies OLS, the kernel nonparametric regression estimator, and the semiparametric estimator of Powell, Stock, and Stoker (1989) to a data set, which should, based on theory and previous empirical work, yield positive coefficients. The semiparametric estimator, on average, displayed the performance most consistent with prior expectations followed by the nonparameter and parametric estimators. In addition, the paper shows how the semiparametric estimator can provide insights into the form of misspecification and suggest data transformations.

Moulton, Brent R., "Interarea Indexes of the Cost of Shelter Using Hedonic Quality Adjustment Techniques," Journal of Econometrics, 68(1), July 1995, pp. 181-204.

Abstract: The cost of shelter is the single most important component of interarea differences in the cost-of-living. This paper constructs hedonic interarea indexes of the cost of shelter using a major new source of detailed microdata, the CPI Housing Survey. Identification of the exact location of housing units permits us to control for measured neighborhood characteristics, and variance components models are used to model the effects of unmeasured neighborhood characteristics. Hierarchical models with interarea slope coefficient variation are applied and model performance is evaluated by comparing out-of-sample predictions. The hierarchical approach allows us to pool information from different cities to reduce the variability of the areas' coefficients. A multilateral index number formula is employed in the index-number construction.

Gilley, Otis W.; Pace, R. Kelley, "Improving Hedonic Estimation with an Inequality Restricted Estimator," Review of Economics and Statistics, 77(4), November 1995, pp. 609-21.

Abstract: Economists commonly estimate the value of characteristics not traded in explicit markets by hedonic pricing. Unfortunately, these nonexplicitly traded characteristics often display a lack of independent variation or multicollinearity. Often some prior information on the value of these characteristics is available from submarkets. This paper utilizes this type of prior information to circumvent multicollinearity problems in hedonic pricing models using an inequality restricted Bayesian estimator. The authors perform a Monte Carlo experiment and cross-validation analysis to demonstrate the superiority of inequality restricted Bayesian over ordinary least squares at many margins in a variety of situations typically faced in hedonic estimation.

Feenstra, Robert C., "Exact Hedonic Price Indexes," Review of Economics and Statistics, 77(4), November 1995, pp. 634-53.

Abstract: Using the marginal value of characteristics, the author shows how to construct bounds on the exact hedonic price index. When prices are above marginal costs, then his bounds still apply but the value of characteristics cannot be measured so easily from a hedonic regression. Since the price-cost markups are an omitted variable, they will bias the coefficients obtained. For a special class of utility functions, the author argues that a linear regression will still provide a measure of the marginal value of characteristics but a log-linear regression will overstate these values.

Hellerstein, Daniel, "Welfare Estimation Using Aggregate and Individual-Observation Models: A Comparison Using Monte Carlo Techniques," American Journal of Agricultural Economics, 77(3), August 1995, pp. 620-30.

Abstract: Due to the weak behavioral foundations of aggregate demand models, zonal travel cost models have been largely abandoned in favor of models based on individual observations. However, sample selection difficulties in individual-observation models often require the use of distribution-sensitive limited-dependent variables estimators. In this paper, the author uses Monte Carlo simulations to investigate whether the bias from aggregation is worse than possible bias from these narrowly specified estimators. Somewhat surprisingly, the results indicate that zonal models often outperform the individual-observation models, especially when using an aggregate model that incorporates intrazonal variance of the explanatory variables.

Smith, V. Kerry; Huang, Ju Chin, "Can Markets Value Air Quality? A Meta-analysis of Hedonic Property Value Models," Journal of Political Economy, 103(1), February 1995, pp. 209-27.

Abstract: This paper reports the results of a statistical summary of estimates of the marginal willingness to pay for reducing particulate matter from hedonic property value models developed between 1967 and 1988. Results from ordinary least squares and minimum absolute deviation estimators consider the effects of market conditions and the implementation procedures for hedonic models. The interquartile range for these estimated marginal values (measured as a change in asset prices) lies between zero and $98.52 (in 1982-84 dollars) for a one-unit reduction in total suspended particulates (in micrograms per cubic meter).

Cheshire, Paul, Sheppard, Stephen "On the Price of Land and the Value of Amenities," Economica, 62(246), May 1995, pp. 247-67.

Abstract: A house represents not only a bundle of structural characteristics but also a set of location specific characteristics. Adding locational coordinates and site area to other house characteristics makes it possible to estimate a land rent surface as well as the hedonic prices attached to local patterns of land use and other neighborhood characteristics. One can then estimate how the value of such location-specific characteristics are capitalized into land prices. This analysis, illustrated with estimates based on data from two British towns, has a number of wider implications. It generates a more parsimonious method of estimating amenity values. It also reveals likely systematic biases produced by conventional hedonic studies which exclude land and location. Finally, it clarifies the conceptual definition of land and suggests that monocentric models can person,n well despite recent criticism.

Fort, Rodney; Rosenman, Robert, "Rethinking the Value of Lost Health," Journal of Legal Economics, 5(1), Spring-Summer 1995, pp. 63-73.

Abstract: Loss estimates in wrongful death and personal injury cases remain a controversial issue among forensic economists. One disputed approach is the so-called "hedonic" loss estimates based on estimates of the value of a "statistical life," which tries to separate the value of life from other losses that an injured party suffers. Given the problems with that approach, analysts interested in estimating losses need alternative methods. This paper discusses the benefits and shortcomings of an alternative, utility theory approach based on first-party valuation of losses, including the lost enjoyment of life, associated with decreased health from personal injury.

Gronberg, Timothy J.; Reed, W. Robert, "Estimating Workers' Marginal Willingness to Pay for Job Attributes Using Duration Data," Journal of Human Resources, 29(3), Summer 1994, pp. 911-31.

Abstract: This paper develops and applies a method for estimating workers' marginal willingness to pay for job attributes when workers' job choices are characterized by imperfect information and labor-market search. As an application, this paper analyzes the job durations of white males using data from the National Longitudinal Survey Youth Cohort and the Dictionary of Occupational Titles. Estimates of workers' willingness to pay derived from the job duration model are compared with those derived from an hedonic wage model.

Israngkura, Adis, "Environmental Benefit Measures: A Comparison between Hedonic and Discrete Choice Models," North Carolina State University, Ph.D. 1994

Vitaliano, Donald F., Hill, Constance "Agricultural Districts and Farmland Prices," Journal of Real Estate Finance and Economics, 8(3), May 1994, pp. 213-23.

Abstract: A hedonic price equation of structureless farmland prices in New York State are fitted to 458 land transactions between 1982-1985. No capitalization is found of the state's Agricultural District farmland preservation program, which combines current-use property taxation with several development-inhibiting features. It is hypothesized that landowners avoid joining the program when it would threaten profits from a development sale, and that those who do participate gain little because agriculture is the highest value use of their land.

Clark, David E.; Nieves, Leslie A., "An Interregional Hedonic Analysis of Noxious Facility Impacts on Local Wages and Property Values," Journal of Environmental Economics and Management, 27(3), November 1994, pp. 235-53.

Collins, Alan; Evans, Alec, "Aircraft Noise and Residential Property Values: An Artificial Neural Network Approach," Journal of Transport Economics and Policy, 28(2), May 1994, pp. 175-97.

Abstract: The powerful pattern-recognition properties of Artificial Neural Networks (ANNs) are outlined and shown to discriminate the effect of aircraft noise from other value determinants in a study of residential property values adjacent to Manchester International Airport. The varying effects of noise on different property types and neighbourhoods are identified and examined. The results are contrasted with earlier hedonic regression-based studies, particularly that of Pennington Topham and Ward (1990) which was the source of the data analyzed.

Alberini, Anna et al., "Valuing Health Effects of Air Pollution in Developing Countries: The Case of Taiwan," Resources for the Future Discussion Paper: 95-01, October 1994, pp. 51.

Abstract: A contingent valuation survey was conducted in three cities of the Republic of China (Taiwan) to elicit willingness to pay to avoid a recurrence of the episode of illness most recently experienced by the respondent. A hedonic specification of the willingness to pay function with willingness to pay depending on the attributes of the illness and the respondent's characteristics reveal that willingness to pay for improved health depends on the duration of the illness, the number of symptoms experienced, and income. The elasticity of willingness to pay with respect to each of these variables is, however, quite low. Willingness to pay (WTP) is also affected by the subject's health history and "taste" for health. We use the fitted WTP function to predict willingness to pay of Taiwan households and compare this prediction with benefits transfer extrapolations that multiply WTP for the U.S. by the ratio of Taiwan household income to U.S. household income.

Israngkura, Adis, "Environmental Benefit Measures: A Comparison between Hedonic and Discrete Choice Models," North Carolina State University, Ph.D. 1994

Chinloy, Peter; Megbolugbe, Isaac F., "Hedonic Mortgages," Journal of Housing Research, 5(1), 1994, pp. 1-21.

Abstract: Just as a hedonic quantity index holds quality constant for a house or other consumer durable, the concept can be applied to a mortgage. A hedonic mortgage holds quality constant across the characteristics of a loan with a dual hedonic yield. Unlike for houses or consumer durables, the prices in a hedonic mortgage yield are observable directly from derivative securities markets, avoiding the identification problem of distinguishing supply and demand functions. The hedonic mortgage prices the characteristics of the mortgage contract, principally a bond, a default insurance portfolio, and a prepayment insurance portfolio.

Xu, Feng; Mittelhammer, Ron C.; Torell, L. Allen, "Modeling Nonnegativity via Truncated Logistic and Normal Distributions: An Application to Ranch Land Price Analysis," Journal of Agricultural and Resource Economics,

19(1), July 1994, pp. 102-14.

Abstract: This study presents an empirical method of modeling the non-negativity of dependent variables using truncated logistic and normal disturbance distributions. The method is applied in estimating a ranch land hedonic price function. Results show that the degree of truncation is significant.

Al Refai, Ahmad Sayed Abdul Mohsen, "Analysis of Tax Incidence within a Simultaneous System of Hedonic Demand Equations: A Case Study of the Los Angeles Housing Market," Claremont Graduate School, Ph.D. 1994

Do, A. Quang; Sirmans, C. F., "Residential Property Tax Capitalization: Discount Rate Evidence from California," National Tax Journal, 47(2), June 1994, pp. 341-48.

Abstract: In spite of the voluminous literature on property tax capitalization, this paper is the first to derive a discount rate empirically. The paper uses an unique data set from a Mello-Roos community facility district where taxes are expected to be totally capitalized into property values. Using a standard hedonic pricing model, the results show that buyers of homes within the community facility district capitalize taxes into the prices of purchased properties at a discount rate of around four percent.

Levesque, Terrence J., "Modelling the Effects of Airport Noise on Residential Housing Markets: A Case Study of Winnipeg International Airport," Journal of Transport Economics and Policy, 28(2), May 1994, pp. 199-210.

Abstract: This hedonic price study of the effect of airport noise on property prices uncovers relationships with the number of events that affect a location, and the mean and variance of the loudness of the events. The results suggest that hedonic price models that include cumulative energy noise measures, such as the Noise Exposure Forecast, do not perform as well as models that use the number and loudness of aircraft noise incidents. Furthermore, Box-Cox estimates of the empirical price function reject the usual specifications found in previous literature.

Gatzlaff, Dean H.; Ling, David C., "Measuring Changes in Local House Prices: An Empirical Investigation of Alternative Methodologies," Journal of Urban Economics, 35(2), March 1994, pp. 221-44.

Abstract: This paper investigates whether reliable house price indices can be constructed using a limited set of descriptive variables on a large number of observations. Four primary index methods are compared: (1) median sale price, (2) restricted hedonic, (3) repeated sales, and (4) the assessed-value technique. The paper examines the precision and accuracy of each of the alternative indices.

Beach, E. Douglas; Carlson, Gerald A., "A Hedonic Analysis of Herbicides: Do User Safety and Water Quality Matter?," American Journal of Agricultural Economics, 75(3), August 1993, pp. 612-23.

Abstract: Farmers may value water quality and user safety characteristics of herbicides as they select among products to obtain weed control. Expenditures per application in the U.S. corn and soybean herbicide markets are explained by several safety characteristics in addition to market and weed control characteristics. The explicit inclusion of safety characteristics in the farm decision model indicates that not all safety aspects of pesticides use are external to farmers. Leaching potential and user toxicity are statistically significant but their elasticities are small relative to broadleaf and grass weed control efficacy.

North, J. H.; Griffin, C. C., "Water Source as a Housing Characteristic: Hedonic Property Valuation and Willingness to Pay for Water," Water Resources Research, 29(7), July 1993, pp. 1923-29.

Cropper, Maureen L. et al., "Valuing Product Attributes Using Single Market Data: A Comparison of Hedonic and Discrete Choice Approaches," Review of Economics and Statistics, 75(2), May 1993, pp. 225-32.

Abstract: This paper compares, via simulation, the performance of the multinomial logit and hedonic models in estimating consumer preferences for product attributes. The authors ascribe preferences over the attributes of houses to a population of consumers and, by having them bid for a set of houses, calculate equilibrium prices. The resulting data are used to estimate the two models. Coauthors are Leland Deck, Nalin Kishor, and Kenneth E. McConnell.

Knight, J. R.; Hill, R. Carter; Sirmans, C. F., "Estimation of Hedonic Housing Price Models Using Nonsample Information: A Monte Carlo Study," Journal of Urban Economics, 34(3), November 1993, pp. 319-46.

Abstract: Using Monte Carlo simulations, this paper evaluates the predictive performance of ordinary least-squares estimation, ridge regression, two empirical Bayes formulations of Stein-like rules that are based on different nonsample information, and a pretest estimator. The context of the experiment is a standard hedonic model for housing values using American Housing Survey data for six geographically diverse metropolitan statistical areas. The simulations reveal that the Stein-like rules empirically dominate least squares under each of three estimation and prediction loss criteria.

Rubin, Geoffrey M., "Is Housing Age a Commodity? Hedonic Price Estimates of Unit Age," Journal of Housing Research, 4(1), 1993, pp. 165-84.

Abstract: Implicit housing price models demonstrate that newer housing units command a premium over similar, older units. Unit condition has long been considered the source of these rent and value differentials. Evidence presented in this article suggests that consumers in many markets may have a pure taste for newer housing. If so, households pay a premium for newness, just as they pay extra for a larger lot, more floor space, and a safer neighborhood. Given two otherwise identical units, the older is less expensive to rent or purchase. Thus, older units most affordably provide a fixed package of housing amenities (a certain floor and lot size, etc.). In particular, policymakers searching for a low-cost method of providing basic housing amenities can turn to older housing. In light of the nation's current housing problems, the discounted price for older units commands attention as a policy instrument.

Berndt, Ernst R.; Showalter, Mark H.; Wooldridge, Jeffrey M., "An Empirical Investigation of the Box-Cox Model and a Nonlinear Least Squares Alternative," Econometric Reviews, 12(1), 1993, pp. 65-102.

Abstract: In this paper we present a generalized functional form estimator, recently developed by Jeffrey Wooldridge; and then we compare it empirically to the popular Box-Cox (BC) estimator using three data sets. We begin by briefly reviewing the drawbacks of the BC estimator. We then introduce the nonlinear least squares (NLS) alternative of Wooldridge which retains the desirable qualities of the BC estimator without the associated theoretical problems. We continue by applying both the BC and the NLS models to data from three classic hedonic regression studies and then compare the estimation results--point estimates, inferences, and fitted values. The estimations include a wage rate equation, and two computer hedonic regression equations, one using data from a classic study by Gregory Chow and the other using an IBM data set, that formed the basis of the new official BLS computer price index.

Arguea, Nestor M.; Hsiao, Cheng, "Econometric Issues of Estimating Hedonic Price Functions: With an Application to the U.S. Market for Automobiles," Journal of Econometrics, 56(1-2), March 1993, pp. 243-67.

Abstract: Some econometric issues associated with the characteristics approach to simplify complex market structures where many differentiated products interact to a smaller number of homogeneous attributes are considered. These include the choice of functional form for the hedonic price equation, the data requirement for the identification of market demand and supply of characteristic s, and the practical method for selecting characteristics to represent differentiated products. The implicit market for U.S. automobile dem and is analyzed to illustrate the authors' approach.

Smith, V. Kerry; Palmquist, Raymond B., "Temporal Substitution and the Recreational Value of Coastal Amenities," Resources for the Future, Quality of the Environment Division Discussion Paper: 93-09, April 1993, pp. 21.

Abstract: This paper uses the three markets (peak, pre, and post season) for weekly rentals of vacation properties along The Outer Banks of North Carolina and the hedonic model to test whether coastal amenities influence the marginal rate of substitution for short term displacement on the timing of recreation trips to the beach. Proximity to the ocean was found to be a significant determinant of temporal substitution between the peak and pre peak seasons with ocean front properties having 1.9 to 4.7 percent smaller discounts for pre season rentals relative to other properties.

Pace, R. Kelley; Gilley, Otis W., "Translating Prior Information across Specifications to Improve Predictive Accuracy," Journal of Business and Economic Statistics, 11(3), July 1993, pp. 301-09.

Abstract: Unrestricted nonlinear models typically outperform their simple linear counterparts in the hedonic pricing and mass assessment fields. Economic theory, however, suggests prior information that most naturally applies to the simple linear model. This article examines the consequences of translating this prior information across specifications. The results show that the addition of the prior information improved the ex-sample prediction accuracy over all sample sizes examined. The prior information effectively augments the sample size, thus extending the domain of these models.

Xu, Feng; Mittelhammer, Ron C.; Barkley, Paul W., "Measuring the Contributions of Site Characteristics to the Value of Agricultural Land," Land Economics, 69(4), November 1993, pp. 356-69.

Abstract: This study examines the effects of different combinations and qualities of selected site characteristics on the value of agricultural land in six substate regions in the state of Washington. The analysis follows the general hedonic regression form but incorporates nonnegativity constraints on the models. This, coupled with an adaptation of H. Bierens's (1990) conditional moment test, yields consistent results showing (1) land value is a function of site characteristics, (2) land markets in the state of Washington are highly regional, (3) parsimonious empirical models can provide adequate representations of expected land values, and (4) nonnegative truncation is a valuable procedure in hedonic models.

Smith, V. Kerry; Huang, Ju Chin, "Hedonic Models and Air Pollution: Twenty-Five Years and Counting," Environmental and Resource Economics, 3(4), August 1993, pp. 381-94.

Pace, R. Kelley, "Nonparametric Methods with Applications to Hedonic Models," Journal of Real Estate Finance and Economics, 7(3), November 1993, pp. 185-204.

Abstract: Current real estate statistical valuation involves the estimation of parameters within a posited specification. Such parametric estimation requires judgment concerning model (1) variables; and (2) functional form. In contrast, nonparametric regression estimation requires attention to (1) but permits greatly reduced attention to (2). Parametric estimators functionally model the parameters and variables affecting E(y|x) while nonparametric estimators directly model pdf(y,x) and hence E(y|x). This article applies the kernel nonparametric regression estimator to two different data sets and specifications. The article shows the nonparametric estimator outperforms the standard parametric estimator (OLS) across variable transformations and across data subsets differing in quality. In addition, the article reviews properties of nonparametric estimators, presents the history of nonparametric estimators in real estate, and discusses a representation of the kernel estimator as a nonparametric grid method.

Pace, R. Kelley; Gilley, Otis W., "Translating Prior Information across Specifications to Improve Predictive Accuracy," Journal of Business and Economic Statistics</