Working Paper: NBER ID: w25107
Authors: David Albouy; Peter Christensen; Ignacio Sarmiento-Barbieri
Abstract: Public goods may exhibit complementarities that are essential for determining their individual value. Our results indicate that improving safety near parks can turn them from public bads to goods. Ignoring complementarities may lead to i) undervaluing the potential value of public goods; ii) overestimating heterogeneity in preferences; and iii) understating the value of public goods to minority households. Recent reductions in crime have “unlocked” $5 billion in property value in Chicago, New York and Philadelphia. Still over half of the potential value of park proximity, over $10 billion, remains locked in.
Keywords: Public Goods; Safety; Urban Parks; Complementarity; Hedonic Valuation
JEL Codes: H41; Q51; Q56; R23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increased crime (K42) | Diminished value of parks (Q26) |
| Crime rates fluctuate (E32) | Changes in park premium (Q26) |
| Park proximity (R53) | Total value to homeowners (R21) |
| Park-crime interaction (K42) | Value perception in minority neighborhoods (R20) |
| Safety near parks (J28) | Park premium stability (E64) |
| High crime rate (K42) | Park premium falls to zero (G19) |
| Improving safety near parks (J28) | Transforming parks from public bads to goods (Q26) |