Garner and Kogan (2007) suggest that home-owners, with the help of interviewers, might be able to give a very good estimate of the true rent by reporting what they would pay to live in their own dwelling.

However, owner-occupiers may over-estimate the true rental value of their dwelling compared to rented homes with similar characteristics given the affinity to their property or neighborhood and should be treated with caution (Frick et al., 2010). Garner and Rozaklis (2001) find in the United States that housing costs with self-reported rental equivalence resulted in higher estimates (almost 15 percent) than those based on a hedonic model.<sup>22</sup> A more recent study by Garner et.al (2006) state that median reported rental equivalence in the US Consumer Expenditure Survey is higher not only than the estimates from a hedonic model on tenants but also from the rent-to-value model and the payment (out-of-pocket expenditure) approach based on the same data. A similar result is found in Goodman and Ittner (1992) who explored the accuracy of owners’ estimates of house values _vis-à-vis_ the sales prices of the same properties, using a national United States sample. The authors find that the median homeowner in the mid-1980s overvalued her house by about 6%.

Several authors compare the approach to home-owned dwellings’ adopted by the US Bureau of Labor Statistics (BLS) for the CPI with the one adopted by the Bureau of Economic Analysis (BEA) for personal consumption expenditures. While the CPI relays on home owners’ self-reported estimates, the BEA uses the rent-to-value ratios. Lebow and Rudd (2003), for instance, suggest that home-owners may give quite inaccurate estimates of what their homes would rent, and this could create large biases in the computation of the CPI, given the large weight attached to the imputed rent category. Garner et al. (2003) found that in 1992, the estimate of dwelling services of renters and owners was about 9 percent higher in the BEA than the BLS. In addition, they find that the two series have consistently grown apart from 1992 to 2000.

As underlined by Garner and Short (2001, p.15), the reason of this mismatch could be both that respondents has a mistaken and biased idea on the market value of their dwelling, or that _the reported rental equivalence values are likely to be capturing variations in housing and neighborhood quality that hedonic approaches do not_ . Moreover, owners might have above-market evaluation of their dwellings because of some special attachment for specific features of their homes, especially if they designed or made those themselves, what Heston and Nakamura (2009) define _owner pride_ factor. Although there is consensus about the existence of this bais and a recommendation about testing it when market rents are developed (Lanjouw, 2009); so far, there is no systematic way or methodological procedure identified in the literature which deals with this problem.

# **2.5 Information from External Sources**

The estimated rent assigned to individuals depends on the imputation method and the quality of the data underpinning the exercise. So far, we have described different estimation methods based on data collected in one household survey. However, this type of dataset may occasionally have limited information on housing that would compromise the quality of results. One possible solution is using other data sources such as: (i) other households surveys; (ii) administrative register; (iii) newspaper or internet offer notices; (v) multiple listing datasets; (vi) mortgage transactions; and (iv) key informant evaluations.

> 22 In 1997, the authors found an estimated expenditure of 18,761$ for the self-reported expenditure as opposed to 16,351$ with hedonic estimate.

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