Estimation of hedonic price functions via additive nonparametric regression

Carlos Martins-Filho and Okmyung Bin ()

Empirical Economics, 2005, vol. 30, issue 1, 93-114

Abstract: We model a hedonic price function for housing as an additive nonparametric regression. Estimation is done via a backfitting procedure in combination with a local polynomial estimator. It avoids the pitfalls of an unrestricted nonparametric estimator, such as slow convergence rates and the curse of dimensionality. Bandwidths are chosen using a novel plug in method that minimizes the asymptotic mean average squared error (AMASE) of the regression. We compare our results to alternative parametric models and find evidence of the superiority of our nonparametric model. From an empirical perspective our study is interesting in that the effects on housing prices of a series of environmental characteristics are modeled in the regression. We find these characteristics to be important in the determination of housing prices. Copyright Springer-Verlag 2005

Keywords: Additive nonparametric regression; local polynomial estimation; hedonic price models; housing markets; C14; R21 (search for similar items in EconPapers)
Date: 2005
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DOI: 10.1007/s00181-004-0224-6

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