A theory-based approach to hedonic price regressions with time-varying unobserved product attributes
Subtitle: the price of pollution
By: Patrick Bajari, Jane Cooley, Kyoo il Kim, Christopher Timmins.
Contributors: Bajari, Patrick L.; National Bureau of Economic Research.
Series: NBER working paper series -- working paper 15724; Working paper series (National Bureau of Economic Research : Online) -- working paper no. 15724.
Publisher: National Bureau of Economic Research
Published: 2010
Place of publication: Cambridge, MA
Language: eng
Format: Electronic resource
Description: "We propose a new strategy for a pervasive problem in the hedonics literature-recovering hedonic prices in the presence of time-varying correlated unobservables.  Our approach relies on an assumption about homebuyer rationality, under which prior sales prices can be used to control for time-varying unobservable attributes of the house or neighborhood.  Using housing transactions data from California's Bay Area between 1990 and 2006, we apply our estimator to recover marginal willingness to pay for reductions in three of the EPA's "criteria" air pollutants.  Our findings suggest that ignoring bias from time-varying correlated unobservables considerably understates the benefits of a pollution reduction policy"--National Bureau of Economic Research web site.
Notes: Title from PDF file as viewed on 3/16/2010.

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