Hedonic prices and public goods: an argument for weighting locational attributes in hedonic regressions by lot size
Article Abstract:
The hedonic price method often is used to determine the value of housing attributes. Current analysis suggests that when measuring locational attributes using a hedonic price function, the measures should be weighted by lot size. Additionally, the analysis suggests that measures of each structural attribute should not be weighted. In a typical scenario, if two houses are equivalent except that the measure of lot size of one house is double that of the other house, then the measure of access to parks, air quality, and other factors for the first house should be double that of the second house. If weighting is not used when applying the hedonic price technique, biased implicit prices for structural and local attributes will result. A graphic explanation of the hedonic price function also is presented.
Publication Name: Journal of Urban Economics
Subject: Government
ISSN: 0094-1190
Year: 1990
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A new approach for identifying the parameters of a tax capitalization model
Article Abstract:
A novel method for estimating property tax capitalization rates is proposed. This new approach advances the field through two innovations. One is that it offers a novel solution to the under-identification dilemma found in previous capitalization studies. This problem is resolved through the use of estimates of rental values instead of estimates of the net user cost. Another innovation is the avoidance of biases that result from likely correlations between property tax rates and unobservable amenities or public services. Analysis revealed that this approach was able to estimate an extent of tax capitalization that is higher than that found in other studies. This estimate was found to be statistically similar to full capitalization.
Publication Name: Journal of Urban Economics
Subject: Government
ISSN: 0094-1190
Year: 1998
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