Working Paper: NBER ID: w9891
Authors: Patrick Bajari; Matthew E. Kahn
Abstract: We present a three-stage estimation procedure to recover willingness to pay for housing attributes. In the first stage, we estimate a non-parametric hedonic home price function. Second, we recover each consumer's taste parameters for product characteristics using first order conditions for utility maximization. Finally, we estimate the distribution of household tastes as a function of household demographics. As an application of our methods, we compare alternative explanations for why blacks choose to live in center cities while whites suburbanize.
Keywords: housing demand; racial segregation; hedonic pricing; consumer preferences
JEL Codes: R0; C5
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| lower household incomes among blacks (J79) | lower demand for suburban housing (R21) |
| local labor market conditions (J29) | urbanization of black households (R20) |
| racial composition and educational levels of neighborhoods (R23) | housing decisions (R21) |