Spatial Econometric Approaches to Estimating Hedonic Property Value Models

Li Wang and Richard Ready

No 19174, 2005 Annual meeting, July 24-27, Providence, RI from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association)

Abstract: The inclusion of spatial correlation of house price in hedonic pricing model may produce better marginal implicit price estimate(s) of the environmental variable(s) of interest. Most applications where a spatial econometric model is applied to the estimation of a hedonic property value model have used either a spatial lag model or a spatial autoregressive (SAR) error model. Incorrect spatial specification may produce even worse estimate outcome than OLS. Three issues regarding the specification of a spatial hedonic pricing model are considered. First, we question the "convention" of row-standardizing the spatial weights matrix. Second, we argue that the spatial error component (SEC) model is more theoretically intuitive and appealing for modeling house price. Third, we explore whether the choice of spatial model is important, empirically, using a large house sale dataset that includes measures of proximity to landfills. With one exception, estimated marginal implicit prices are fairly robust across all models.

Keywords: Public; Economics (search for similar items in EconPapers)
Pages: 50
Date: 2005
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://ageconsearch.umn.edu/record/19174/files/sp05wa06.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ags:aaea05:19174

DOI: 10.22004/ag.econ.19174

Access Statistics for this paper

More papers in 2005 Annual meeting, July 24-27, Providence, RI from American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().