Connect-The-Dots: Identification of Heterogeneous Marginal Willingness to Pay Functions under Time-Varying Preferences

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Connect-The-Dots: Identification of Heterogeneous Marginal Willingness to Pay Functions under Time-Varying Preferences. / Hansen, Maria Juul.

2021.

Publikation: KonferencebidragPaperForskning

Harvard

Hansen, MJ 2021, 'Connect-The-Dots: Identification of Heterogeneous Marginal Willingness to Pay Functions under Time-Varying Preferences'.

APA

Hansen, M. J. (2021). Connect-The-Dots: Identification of Heterogeneous Marginal Willingness to Pay Functions under Time-Varying Preferences.

Vancouver

Hansen MJ. Connect-The-Dots: Identification of Heterogeneous Marginal Willingness to Pay Functions under Time-Varying Preferences. 2021.

Author

Hansen, Maria Juul. / Connect-The-Dots: Identification of Heterogeneous Marginal Willingness to Pay Functions under Time-Varying Preferences.

Bibtex

@conference{39e30eb977ae4f7cb03177af1fd18fc4,
title = "Connect-The-Dots: Identification of Heterogeneous Marginal Willingness to Pay Functions under Time-Varying Preferences",
abstract = "Models based on residential location choice have become commonplace in the non-market valuation literature. Rosen (1974) provides a utility-theoretic basis for hedonic models to be used to measure the welfare consequences of changes in local public goods and amenities. However, his proposed two-stage estimation procedure embodies a number of difficult econometric problems that have become the focus of research for decades. My paper builds upon the {"}inversion{"} approach suggested by Bajari and Benkard (2005) and the buyer-panel extension of that work proposed by Bishop and Timmins (2018). The latter paper shows how data on repeat purchases can be used to flexibly recover preferences with rich individual heterogeneity, but the method is unable to deal well with time-varying individual attributes that might prompt residential location changes. I expand that approach to deal with any number of time-varying individual attributes including income, family structure and other drivers of housing choice. I apply that method to detailed longitudinal data from the Danish census, and use the estimates to value non-marginal changes in violent crime rates. I demonstrate a significant and policy-relevant bias from failing to properly account for the endogeneity problems in Rosen (1974). ",
keywords = "Faculty of Social Sciences, Non-Market Valuation, Marginal Willingness to Pay, Hedonic Analysis, Violent Crime",
author = "Hansen, {Maria Juul}",
year = "2021",
language = "English",

}

RIS

TY - CONF

T1 - Connect-The-Dots: Identification of Heterogeneous Marginal Willingness to Pay Functions under Time-Varying Preferences

AU - Hansen, Maria Juul

PY - 2021

Y1 - 2021

N2 - Models based on residential location choice have become commonplace in the non-market valuation literature. Rosen (1974) provides a utility-theoretic basis for hedonic models to be used to measure the welfare consequences of changes in local public goods and amenities. However, his proposed two-stage estimation procedure embodies a number of difficult econometric problems that have become the focus of research for decades. My paper builds upon the "inversion" approach suggested by Bajari and Benkard (2005) and the buyer-panel extension of that work proposed by Bishop and Timmins (2018). The latter paper shows how data on repeat purchases can be used to flexibly recover preferences with rich individual heterogeneity, but the method is unable to deal well with time-varying individual attributes that might prompt residential location changes. I expand that approach to deal with any number of time-varying individual attributes including income, family structure and other drivers of housing choice. I apply that method to detailed longitudinal data from the Danish census, and use the estimates to value non-marginal changes in violent crime rates. I demonstrate a significant and policy-relevant bias from failing to properly account for the endogeneity problems in Rosen (1974).

AB - Models based on residential location choice have become commonplace in the non-market valuation literature. Rosen (1974) provides a utility-theoretic basis for hedonic models to be used to measure the welfare consequences of changes in local public goods and amenities. However, his proposed two-stage estimation procedure embodies a number of difficult econometric problems that have become the focus of research for decades. My paper builds upon the "inversion" approach suggested by Bajari and Benkard (2005) and the buyer-panel extension of that work proposed by Bishop and Timmins (2018). The latter paper shows how data on repeat purchases can be used to flexibly recover preferences with rich individual heterogeneity, but the method is unable to deal well with time-varying individual attributes that might prompt residential location changes. I expand that approach to deal with any number of time-varying individual attributes including income, family structure and other drivers of housing choice. I apply that method to detailed longitudinal data from the Danish census, and use the estimates to value non-marginal changes in violent crime rates. I demonstrate a significant and policy-relevant bias from failing to properly account for the endogeneity problems in Rosen (1974).

KW - Faculty of Social Sciences

KW - Non-Market Valuation

KW - Marginal Willingness to Pay

KW - Hedonic Analysis

KW - Violent Crime

M3 - Paper

ER -

ID: 254997638