Love Thy Neighbor: Income Distribution and Housing Preferences
نویسندگان
چکیده
Do homeowners prefer living in an area with a more equal distribution of income? We answer this question by estimating a nonparametric hedonic pricing model for about 90,000 housing units transacted in Hong Kong between 2005 and 2006. We first identify a hedonic price function by locally regressing the rental price of the housing unit on its intrinsic and neighborhood characteristics, one of which is the Gini coefficient for household income of the constituency area. We then combine the estimates with a log utility function to obtain the heterogeneous preference parameters. Finally, we estimate the joint distribution of the preference parameters and demographics. We find that most homeowners have a strong distaste for inequality in their neighborhood, and the distaste increases with income and goes down with age. Counterfactual experiments show that reallocating Public Rental Housing by half can increase the welfare of homeowners by about HK$8,000 on average per year, which is equivalent to increasing the housing unit by 20 square feet or reducing the age of the unit by 5 years. ∗First draft: March 2010. Leung: Department of Economics, Chinese University of Hong Kong, Room 914, Esther Lee Building, Chung Chi Campus, Shatin, Hong Kong. Email: [email protected]. Tsang : Department of Economics, Virginia Tech, Pamplin Hall (0316), Blacksburg, Virginia, 24061. Email: [email protected].
منابع مشابه
Metropolitan Growth, Inequality, and Neighborhood Segregation by Income
This paper investigates the relationship between metropolitan area growth, inequality, and segregation by income across neighborhoods. I propose a simple model based on the notion that rising income inequality creates housing market pressure leading to residential segregation by income. However, because different income groups live in different types of houses, the housing stock must change if ...
متن کاملConstrain-thy-neighbor effects as a determinant of transnational interest group cohesion
This article identifies conditions for transnational interest group cohesion by examining German and British employer positions on EU company law proposals. Employers were divided over proposals on takeover bids but formed a united front against proposals on worker participation. I argue that divergent “constrain-thy-neighbor effects” contribute to explaining the observed variation. Actors cons...
متن کاملMetropolitan Growth and Neighborhood Segregation by Income
U.S. metropolitan neighborhoods have become increasingly segregated by income over the past thirty years. The metropolitan areas with the largest rises in income segregation include a number of distressed cities in industrial decline, as well as a subset of rapidly growing metropolitan areas. I propose a simple model based on the notion that rising income inequality creates market pressure (or ...
متن کاملEvolution: Love thy Neighbour
Five neighbouring populations of a cichlid fish from Lake Malawi differ in male courtship colour. Females show strong mate preferences for male coloration from their own populations. This suggests that sexual selection is an important factor contributing to speciation in cichlids.
متن کامل