Working Paper: NBER ID: w29960
Authors: Fernando V. Ferreira; Maisy Wong
Abstract: We investigate how neighborhood preferences and choices changed one year after the beginning of the COVID pandemic. We study a Neighborhood Choice Program that helped graduating students choose where to live by providing new information about rents and amenities. Using panel data on neighborhood rankings before and after information, we find that changes in rankings favor neighborhoods where social and professional network shares are higher by 2.2 percentage points, rents are lower by $432, and are 2.4 kilometers farther from the city center. Interestingly, we did not detect this movement away from downtowns when the program was offered prior to the pandemic. We then estimate a neighborhood choice model to recover MWTP for amenities both before and after the pandemic. Our estimates reveal that MWTP for network shares post COVID is markedly lower than prior to COVID. Finally, we perform counterfactuals to quantitatively assess how changes in preferences affect where people live, and find that weaker network preferences are most impactful, while heterogeneity by commute and work-from-home are less relevant.
Keywords: neighborhood choice; COVID-19; rents; amenities; work-from-home
JEL Codes: G0; H0; J0; R0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| COVID pandemic (H12) | preference for neighborhoods with higher social and professional network shares (R23) |
| COVID pandemic (H12) | decrease in rent preferences (R21) |
| COVID pandemic (H12) | preference for neighborhoods farther from city center (R23) |
| COVID pandemic (H12) | decrease in marginal willingness to pay for network shares (D16) |
| pre-information rankings (D80) | neighborhood desirability after information shock (R23) |
| changes in preferences (D11) | residential location choices post-COVID (R23) |