Title: DO “CAPITALIZATION EFFECTS” FOR PUBLIC GOODS REVEAL THE PUBLIC'S WILLINGNESS TO PAY?
Abstract: International Economic ReviewVolume 55, Issue 4 p. 1227-1250 Original Article DO “CAPITALIZATION EFFECTS” FOR PUBLIC GOODS REVEAL THE PUBLIC'S WILLINGNESS TO PAY? Nicolai V. Kuminoff, Corresponding Author Nicolai V. Kuminoff Arizona State University, U.S.A.Please address correspondence to: Nicolai V. Kuminoff, Arizona State University, Tempe, AZ 85287-9801 U.S.A. Phone: 480-727-9802. Fax: 480-965-0748. E-mail: [email protected]Search for more papers by this authorJaren C. Pope, Jaren C. Pope Brigham Young University, U.S.A. We appreciate helpful comments from Spencer Banzhaf, Pat Bayer, Kelly Bishop, Richard Carson, Janet Currie, Tom Downes, Roger von Haefen, Matt Kahn, Mike Keane, Michael Hanemann, Glenn MacDonald, Gilbert Metcalf, Alvin Murphy, Derek Neal, Ray Palmquist, Ed Prescott, Jonah Rockoff, Ed Schlee, Ran Tao, Chris Timmins, Jeff Zabel, Hong Zhao, and especially V. Kerry Smith. We are grateful to the editor, Holger Sieg, and two anonymous referees for insightful comments on previous drafts. We also thank participants of the 2010 AEA meetings, the 2010 W2133 meetings, and the 2010 Duke conference on housing market dynamics and seminar participants at Arizona State University, Brigham Young University, Research Triangle Institute, Tufts University, University of Calgary, University of Tennessee, Utah State University, Virginia Tech, and Washington University in St. Louis. An earlier draft was circulated as “Hedonic Equilibria, Land Value Capitalization, and the Willingness to Pay for Public Goods.” All remaining errors are our own.Search for more papers by this author Nicolai V. Kuminoff, Corresponding Author Nicolai V. Kuminoff Arizona State University, U.S.A.Please address correspondence to: Nicolai V. Kuminoff, Arizona State University, Tempe, AZ 85287-9801 U.S.A. Phone: 480-727-9802. Fax: 480-965-0748. E-mail: [email protected]Search for more papers by this authorJaren C. Pope, Jaren C. Pope Brigham Young University, U.S.A. We appreciate helpful comments from Spencer Banzhaf, Pat Bayer, Kelly Bishop, Richard Carson, Janet Currie, Tom Downes, Roger von Haefen, Matt Kahn, Mike Keane, Michael Hanemann, Glenn MacDonald, Gilbert Metcalf, Alvin Murphy, Derek Neal, Ray Palmquist, Ed Prescott, Jonah Rockoff, Ed Schlee, Ran Tao, Chris Timmins, Jeff Zabel, Hong Zhao, and especially V. Kerry Smith. We are grateful to the editor, Holger Sieg, and two anonymous referees for insightful comments on previous drafts. We also thank participants of the 2010 AEA meetings, the 2010 W2133 meetings, and the 2010 Duke conference on housing market dynamics and seminar participants at Arizona State University, Brigham Young University, Research Triangle Institute, Tufts University, University of Calgary, University of Tennessee, Utah State University, Virginia Tech, and Washington University in St. Louis. An earlier draft was circulated as “Hedonic Equilibria, Land Value Capitalization, and the Willingness to Pay for Public Goods.” All remaining errors are our own.Search for more papers by this author First published: 28 October 2014 https://doi.org/10.1111/iere.12088Citations: 127 Read the full textAboutPDF ToolsRequest permissionExport citationAdd to favoritesTrack citation ShareShare Give accessShare full text accessShare full-text accessPlease review our Terms and Conditions of Use and check box below to share full-text version of article.I have read and accept the Wiley Online Library Terms and Conditions of UseShareable LinkUse the link below to share a full-text version of this article with your friends and colleagues. Learn more.Copy URL Abstract This article develops a welfare theoretic framework for interpreting evidence on the impacts of public programs on housing markets. We extend Rosen's hedonic model to explain how housing prices capitalize exogenous shocks to public goods and externalities. The model predicts that trading between heterogeneous buyers and sellers will drive a wedge between these “capitalization effects” and welfare changes. We test this hypothesis in the context of changes in measures of school quality in five metropolitan areas. Results from boundary discontinuity designs suggest that capitalization effects understate parents’ willingness to pay for public school improvements by as much as 75%. Citing Literature Supporting Information Filename Description iere12088-sup-0001-SuppMat.pdf106.7 KB Figure A1. DIFFERENCE BETWEEN CAPITALIZATION EFFECTS AND MWTP. Figure A2. DIFFERENCE BETWEEN CAPITALIZATION EFFECTS AND MWTP. Table A1. ROBUSTNESS CHECKS ON TEST SCORE COEFFICIENTS. Table A2. ADDITIONAL ROBUSTNESS CHECKS FOR AGGREGATION BIAS. Table A3. SUMMARY STATISTICS FOR HOUSING, NEIGHBORHOODS, AND PUBLIC SCHOOLS IN PORTLAND, OR. Table A4. SUMMARY STATISTICS FOR HOUSING, NEIGHBORHOODS, AND PUBLIC SCHOOLS IN PHILADELPHIA, PA. Table A5. SUMMARY STATISTICS FOR HOUSING, NEIGHBORHOODS, AND PUBLIC SCHOOLS IN DETROIT, MI. Table A6. SUMMARY STATISTICS FOR HOUSING, NEIGHBORHOODS, AND PUBLIC SCHOOLS IN LOS ANGELES, CA. Please note: The publisher is not responsible for the content or functionality of any supporting information supplied by the authors. Any queries (other than missing content) should be directed to the corresponding author for the article. Volume55, Issue4November 2014Pages 1227-1250 RelatedInformation
Publication Year: 2014
Publication Date: 2014-10-28
Language: en
Type: article
Indexed In: ['crossref']
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Cited By Count: 210
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