Full Citation

Title: Estimating the marginal willingness to pay function without instrumental variables

Citation Type: Journal Article

Publication Year: 2019

ISBN:

ISSN: 00941190

DOI: 10.1016/j.jue.2018.11.006

NSFID:

PMCID:

PMID:

Abstract: The hedonic model of Rosen (1974) has become a workhorse for valuing the characteristics of differentiated products despite a number of well-documented econometric problems, including a source of endogeneity that has proven difficult to overcome. Here we outline a simple, likelihood-based estimation approach for recovering the marginal willingness-to-pay function that avoids this endogeneity problem. Using this framework, we find that marginal willingness-to-pay to avoid violent crime increases by sixteen cents with each additional incident per 100,000 residents. Accounting for the slope of the marginal willingness-to-pay function has significant impacts on welfare analyses.

Url: https://www.sciencedirect.com/science/article/pii/S0094119018300998

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Authors: Bishop, Kelly C.; Timmins, Christopher

Periodical (Full): Journal of Urban Economics

Issue:

Volume: 109

Pages: 66-83

Data Collections: IPUMS USA

Topics: Other

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