Working Paper: NBER ID: w14472
Authors: David Albouy
Abstract: The standard revealed-preference estimate of a city's quality of life is proportional to that city's cost-of-living relative to its wage-level. Adjusting estimates to account for federal taxes, non-housing costs, and non-labor income produces more plausible quality-of-life estimates than in the previous literature. Unlike previous estimates, adjusted quality-of-life measures successfully predict how housing costs rise with wage levels, are positively correlated with popular "livability" rankings and stated preferences, and do not decrease with city size. Mild seasons, sunshine, hills, and coastal proximity account for most inter-metropolitan quality-of-life differences. Amendments to quality-of-life measures for labor-market disequilibrium and household heterogeneity provide additional insights.
Keywords: Quality of Life; Urban Economics; Revealed Preference; Housing Costs; Wages
JEL Codes: H4; J3; Q51; Q54; R1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Adjusted QOL Measures (C31) | Livability Rankings (R23) |
| City Size (R12) | Quality of Life (QOL) (I31) |
| Wage Levels (J31) | Housing Costs (R31) |
| Wage Levels (J31) | Quality of Life (QOL) (I31) |