Validating Spatial Hedonic Modeling with a Behavioral Approach: Measuring the Impact of Water Quality Degradation on Coastal Housing Markets

Human perception of water quality that determines utility and behavior may not correspond to often used science-based measures, leading to mismeasurement of implicit prices in hedonic models. This paper seeks to estimate the effect of water quality degradation on the sale price of coastal single-family residential properties using a spatially explicit hedonic approach, while validating the measure of water quality using a behavioral approach. The results show that a combined approach of hedonic modeling and behavioral validation is an important preliminary step in addressing omitted variable and perception biases present in traditional hedonic modeling approaches.

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Conference Paper/ Presentation
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JEL Codes:
Q5; Q510

 Record created 2017-04-01, last modified 2020-10-28

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