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A Dynamic Model of Demand for Houses and Neighborhoods

Publication ,  Journal Article
Bayer, P; McMillan, R; Murphy, A; Timmins, C
Published in: Econometrica
May 1, 2016

This paper develops a dynamic model of neighborhood choice along with a computationally light multi-step estimator. The proposed empirical framework captures observed and unobserved preference heterogeneity across households and locations in a flexible way. We estimate the model using a newly assembled data set that matches demographic information from mortgage applications to the universe of housing transactions in the San Francisco Bay Area from 1994 to 2004. The results provide the first estimates of the marginal willingness to pay for several non-marketed amenities-neighborhood air pollution, violent crime, and racial composition-in a dynamic framework. Comparing these estimates with those from a static version of the model highlights several important biases that arise when dynamic considerations are ignored.

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Published In

Econometrica

DOI

EISSN

1468-0262

ISSN

0012-9682

Publication Date

May 1, 2016

Volume

84

Issue

3

Start / End Page

893 / 942

Related Subject Headings

  • Econometrics
  • 3803 Economic theory
  • 3802 Econometrics
  • 3801 Applied economics
  • 1403 Econometrics
  • 1402 Applied Economics
  • 1401 Economic Theory
 

Citation

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Bayer, P., McMillan, R., Murphy, A., & Timmins, C. (2016). A Dynamic Model of Demand for Houses and Neighborhoods. Econometrica, 84(3), 893–942. https://doi.org/10.3982/ECTA10170
Bayer, P., R. McMillan, A. Murphy, and C. Timmins. “A Dynamic Model of Demand for Houses and Neighborhoods.” Econometrica 84, no. 3 (May 1, 2016): 893–942. https://doi.org/10.3982/ECTA10170.
Bayer P, McMillan R, Murphy A, Timmins C. A Dynamic Model of Demand for Houses and Neighborhoods. Econometrica. 2016 May 1;84(3):893–942.
Bayer, P., et al. “A Dynamic Model of Demand for Houses and Neighborhoods.” Econometrica, vol. 84, no. 3, May 2016, pp. 893–942. Scopus, doi:10.3982/ECTA10170.
Bayer P, McMillan R, Murphy A, Timmins C. A Dynamic Model of Demand for Houses and Neighborhoods. Econometrica. 2016 May 1;84(3):893–942.
Journal cover image

Published In

Econometrica

DOI

EISSN

1468-0262

ISSN

0012-9682

Publication Date

May 1, 2016

Volume

84

Issue

3

Start / End Page

893 / 942

Related Subject Headings

  • Econometrics
  • 3803 Economic theory
  • 3802 Econometrics
  • 3801 Applied economics
  • 1403 Econometrics
  • 1402 Applied Economics
  • 1401 Economic Theory