IDEAS home Printed from https://ideas.repec.org/a/eee/pubeco/v182y2020ics0047272719301720.html
   My bibliography  Save this article

Unlocking amenities: Estimating public good complementarity

Author

Listed:
  • Albouy, David
  • Christensen, Peter
  • Sarmiento-Barbieri, Ignacio

Abstract

Public goods may exhibit complementarities that are essential for determining their individual value. Our results indicate that improving safety near parks can turn them from public bads to goods. Ignoring complementarities may lead to i) undervaluing the potential value of public goods; ii) overestimating heterogeneity in preferences; and iii) understating the value of public goods to minority households. Recent reductions in crime have “unlocked” almost $7 billion in property value in Chicago, New York and Philadelphia. Still, two-fifths of the potential value of park proximity, $10 billion, remains locked-in.

Suggested Citation

  • Albouy, David & Christensen, Peter & Sarmiento-Barbieri, Ignacio, 2020. "Unlocking amenities: Estimating public good complementarity," Journal of Public Economics, Elsevier, vol. 182(C).
  • Handle: RePEc:eee:pubeco:v:182:y:2020:i:c:s0047272719301720
    DOI: 10.1016/j.jpubeco.2019.104110
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0047272719301720
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.jpubeco.2019.104110?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Mirko Draca & Stephen Machin & Robert Witt, 2011. "Panic on the Streets of London: Police, Crime, and the July 2005 Terror Attacks," American Economic Review, American Economic Association, vol. 101(5), pages 2157-2181, August.
    2. Rebecca Diamond & Tim McQuade, 2019. "Who Wants Affordable Housing in Their Backyard? An Equilibrium Analysis of Low-Income Property Development," Journal of Political Economy, University of Chicago Press, vol. 127(3), pages 1063-1117.
    3. Lucija Muehlenbachs & Elisheba Spiller & Christopher Timmins, 2015. "The Housing Market Impacts of Shale Gas Development," American Economic Review, American Economic Association, vol. 105(12), pages 3633-3659, December.
    4. Aliprantis, Dionissi & Hartley, Daniel, 2015. "Blowing it up and knocking it down: The local and city-wide effects of demolishing high concentration public housing on crime," Journal of Urban Economics, Elsevier, vol. 88(C), pages 67-81.
    5. Joseph G. Altonji & Todd E. Elder & Christopher R. Taber, 2005. "Selection on Observed and Unobserved Variables: Assessing the Effectiveness of Catholic Schools," Journal of Political Economy, University of Chicago Press, vol. 113(1), pages 151-184, February.
    6. Koichiro Ito & Shuang Zhang, 2020. "Willingness to Pay for Clean Air: Evidence from Air Purifier Markets in China," Journal of Political Economy, University of Chicago Press, vol. 128(5), pages 1627-1672.
    7. Kleibergen, Frank & Paap, Richard, 2006. "Generalized reduced rank tests using the singular value decomposition," Journal of Econometrics, Elsevier, vol. 133(1), pages 97-126, July.
    8. Ivar Ekeland & James J. Heckman & Lars Nesheim, 2004. "Identification and Estimation of Hedonic Models," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages 60-109, February.
    9. Kirill Borusyak & Peter Hull & Xavier Jaravel, 2022. "Quasi-Experimental Shift-Share Research Designs [Sampling-based vs. Design-based Uncertainty in Regression Analysis]," Review of Economic Studies, Oxford University Press, vol. 89(1), pages 181-213.
    10. Patrick Bayer & Fernando Ferreira & Robert McMillan, 2007. "A Unified Framework for Measuring Preferences for Schools and Neighborhoods," Journal of Political Economy, University of Chicago Press, vol. 115(4), pages 588-638, August.
    11. Victor Couture & Jessie Handbury, 2017. "Urban Revival in America, 2000 to 2010," NBER Working Papers 24084, National Bureau of Economic Research, Inc.
    12. Hannah Druckenmiller & Solomon Hsiang, 2018. "Accounting for Unobservable Heterogeneity in Cross Section Using Spatial First Differences," NBER Working Papers 25177, National Bureau of Economic Research, Inc.
    13. Joshua Graff Zivin & Matthew Neidell, 2014. "Temperature and the Allocation of Time: Implications for Climate Change," Journal of Labor Economics, University of Chicago Press, vol. 32(1), pages 1-26.
    14. Albouy, David & Ehrlich, Gabriel, 2018. "Housing productivity and the social cost of land-use restrictions," Journal of Urban Economics, Elsevier, vol. 107(C), pages 101-120.
    15. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
    16. Ivar Ekeland & James J. Heckman & Lars Nesheim, 2004. "Identification and Estimation of Hedonic Models," Journal of Political Economy, University of Chicago Press, vol. 112(S1), pages 60-109, February.
    17. David A. Keiser & Joseph K. Shapiro, 2018. "Consequences of the Clean Water Act and the Demand for Water Quality," Center for Agricultural and Rural Development (CARD) Publications 17-wp571, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    18. Aaron Chalfin & Justin McCrary, 2018. "Are U.S. Cities Underpoliced? Theory and Evidence," The Review of Economics and Statistics, MIT Press, vol. 100(1), pages 167-186, March.
    19. McMillen, Daniel & Sarmiento-Barbieri, Ignacio & Singh, Ruchi, 2019. "Do more eyes on the street reduce Crime? Evidence from Chicago's safe passage program," Journal of Urban Economics, Elsevier, vol. 110(C), pages 1-25.
    20. David Albouy & Walter Graf & Ryan Kellogg & Hendrik Wolff, 2016. "Climate Amenities, Climate Change, and American Quality of Life," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 3(1), pages 205-246.
    21. Espey, Molly & Owusu-Edusei, Kwame, 2001. "Neighborhood Parks And Residential Property Values In Greenville, South Carolina," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 33(3), pages 1-6, December.
    22. Kelly C. Bishop & Alvin D. Murphy, 2019. "Valuing Time-Varying Attributes Using the Hedonic Model: When Is a Dynamic Approach Necessary?," The Review of Economics and Statistics, MIT Press, vol. 101(1), pages 134-145, March.
    23. Timothy J. Bartik, 1991. "Who Benefits from State and Local Economic Development Policies?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number wbsle, November.
    24. Steve Gibbons, 2004. "The Costs of Urban Property Crime," Economic Journal, Royal Economic Society, vol. 114(499), pages 441-463, November.
    25. Kenneth Y. Chay & Michael Greenstone, 2005. "Does Air Quality Matter? Evidence from the Housing Market," Journal of Political Economy, University of Chicago Press, vol. 113(2), pages 376-424, April.
    26. Michael Greenstone & Justin Gallagher, 2008. "Does Hazardous Waste Matter? Evidence from the Housing Market and the Superfund Program," The Quarterly Journal of Economics, Oxford University Press, vol. 123(3), pages 951-1003.
    27. Gamper-Rabindran, Shanti & Timmins, Christopher, 2013. "Does cleanup of hazardous waste sites raise housing values? Evidence of spatially localized benefits," Journal of Environmental Economics and Management, Elsevier, vol. 65(3), pages 345-360.
    28. Marie Connolly, 2008. "Here Comes the Rain Again: Weather and the Intertemporal Substitution of Leisure," Journal of Labor Economics, University of Chicago Press, vol. 26(1), pages 73-100.
    29. David A Keiser & Joseph S Shapiro, 2019. "Consequences of the Clean Water Act and the Demand for Water Quality," The Quarterly Journal of Economics, Oxford University Press, vol. 134(1), pages 349-396.
    30. Janet Currie & Lucas Davis & Michael Greenstone & Reed Walker, 2015. "Environmental Health Risks and Housing Values: Evidence from 1,600 Toxic Plant Openings and Closings," American Economic Review, American Economic Association, vol. 105(2), pages 678-709, February.
    31. Ihlanfeldt, Keith & Mayock, Tom, 2010. "Panel data estimates of the effects of different types of crime on housing prices," Regional Science and Urban Economics, Elsevier, vol. 40(2-3), pages 161-172, May.
    32. Bowes, David R. & Ihlanfeldt, Keith R., 2001. "Identifying the Impacts of Rail Transit Stations on Residential Property Values," Journal of Urban Economics, Elsevier, vol. 50(1), pages 1-25, July.
    33. Thaler, Richard, 1978. "A note on the value of crime control: Evidence from the property market," Journal of Urban Economics, Elsevier, vol. 5(1), pages 137-145, January.
    34. repec:dau:papers:123456789/6486 is not listed on IDEAS
    35. H. Spencer Banzhaf & Randall P. Walsh, 2008. "Do People Vote with Their Feet? An Empirical Test of Tiebout," American Economic Review, American Economic Association, vol. 98(3), pages 843-863, June.
    36. Rafael Di Tella & Ernesto Schargrodsky, 2004. "Do Police Reduce Crime? Estimates Using the Allocation of Police Forces After a Terrorist Attack," American Economic Review, American Economic Association, vol. 94(1), pages 115-133, March.
    37. H. Spencer Banzhaf, 2020. "Panel Data Hedonics: Rosen'S First Stage As A “Sufficient Statistic”," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 61(2), pages 973-1000, May.
    38. Timothy J. Bartik & V. Kerry Smith, 1996. "Urban Amenities and Public Policy," Book chapters authored by Upjohn Institute researchers, in: V. Kerry Smith (ed.),Estimating Economic Values for Nature: Methods for Non-Market Valuation, pages 271-318, W.E. Upjohn Institute for Employment Research.
    39. Spencer Banzhaf & Lala Ma & Christopher Timmins, 2019. "Environmental Justice: The Economics of Race, Place, and Pollution," Journal of Economic Perspectives, American Economic Association, vol. 33(1), pages 185-208, Winter.
    40. Daniel P. McMillen, 2012. "Repeat Sales as a Matching Estimator," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 40(4), pages 743-771, December.
    41. Nicolai V. Kuminoff & V. Kerry Smith & Christopher Timmins, 2013. "The New Economics of Equilibrium Sorting and Policy Evaluation Using Housing Markets," Journal of Economic Literature, American Economic Association, vol. 51(4), pages 1007-1062, December.
    42. Paul Goldsmith-Pinkham & Isaac Sorkin & Henry Swift, 2020. "Bartik Instruments: What, When, Why, and How," American Economic Review, American Economic Association, vol. 110(8), pages 2586-2624, August.
    43. Lawrence D. Brown & Eitan Greenshtein & Ya'acov Ritov, 2013. "The Poisson Compound Decision Problem Revisited," Journal of the American Statistical Association, Taylor & Francis Journals, vol. 108(502), pages 741-749, June.
    44. Leigh Linden & Jonah E. Rockoff, 2008. "Estimates of the Impact of Crime Risk on Property Values from Megan's Laws," American Economic Review, American Economic Association, vol. 98(3), pages 1103-1127, June.
    45. Peter Christensen & Christopher Timmins, 2018. "Sorting or Steering: The Effects of Housing Discrimination on Neighborhood Choice," NBER Working Papers 24826, National Bureau of Economic Research, Inc.
    46. Anderson, Soren T. & West, Sarah E., 2006. "Open space, residential property values, and spatial context," Regional Science and Urban Economics, Elsevier, vol. 36(6), pages 773-789, November.
    47. Pope, Devin G. & Pope, Jaren C., 2012. "Crime and property values: Evidence from the 1990s crime drop," Regional Science and Urban Economics, Elsevier, vol. 42(1-2), pages 177-188.
    48. Albouy, David & Lue, Bert, 2015. "Driving to opportunity: Local rents, wages, commuting, and sub-metropolitan quality of life," Journal of Urban Economics, Elsevier, vol. 89(C), pages 74-92.
    49. Lucas W. Davis, 2004. "The Effect of Health Risk on Housing Values: Evidence from a Cancer Cluster," American Economic Review, American Economic Association, vol. 94(5), pages 1693-1704, December.
    50. Stigler, George J & Becker, Gary S, 1977. "De Gustibus Non Est Disputandum," American Economic Review, American Economic Association, vol. 67(2), pages 76-90, March.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Melanie Krause & André Seidel, 2020. "Land Scarcity and Urban Density within Cities," CESifo Working Paper Series 8660, CESifo.
    2. Howard, Greg & Ornaghi, Arianna, 2021. "Closing Time: The Local Equilibrium Effects of Prohibition," The Journal of Economic History, Cambridge University Press, vol. 81(3), pages 792-830, September.
    3. Ross Hickey & Steeve Mongrain & Joanne Roberts & Tanguy van Ypersele, 2021. "Private protection and public policing," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(1), pages 5-28, February.
    4. Bieri, David S. & Kuminoff, Nicolai V. & Pope, Jaren C., 2023. "National expenditures on local amenities," Journal of Environmental Economics and Management, Elsevier, vol. 117(C).
    5. Brian Beach & Daniel B. Jones & Tate Twinam & Randall Walsh, 2018. "Minority Representation in Local Government," NBER Working Papers 25192, National Bureau of Economic Research, Inc.
    6. Su, Yichen, 2022. "Measuring the Value of Urban Consumption Amenities: A Time-Use Approach," Journal of Urban Economics, Elsevier, vol. 132(C).
    7. Brent, Daniel & Beland, Louis-Philippe, 2020. "Traffic congestion, transportation policies, and the performance of first responders," Journal of Environmental Economics and Management, Elsevier, vol. 103(C).
    8. Su, Yichen, 2022. "Measuring the Value of Urban Consumption Amenities: A Time-Use Approach," MPRA Paper 113158, University Library of Munich, Germany.
    9. Ikuto Aiba & Yasuhiro Sato, 2020. "A Theory of Public Goods under Complementarity between Safety and Consumptions," CIRJE F-Series CIRJE-F-1150, CIRJE, Faculty of Economics, University of Tokyo.
    10. Albouy, David & Farahani, Arash & Kim, Heejin, 2018. "Productivity and Quality-of-Life Benefits to Rural Infrastructure," Issue Reports 277657, Farm Foundation.
    11. Ellen, Ingrid Gould & Horn, Keren Mertens & Reed, Davin, 2019. "Has falling crime invited gentrification?," Journal of Housing Economics, Elsevier, vol. 46(C).
    12. Malik, Khyati & Kim, Sowon & Cultice, Brian J., 2023. "The Impact of Remote Work on Green Space Values in Regional Housing Markets," 2023 Annual Meeting, July 23-25, Washington D.C. 335486, Agricultural and Applied Economics Association.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. H. Spencer Banzhaf, 2021. "Difference-in-Differences Hedonics," Journal of Political Economy, University of Chicago Press, vol. 129(8), pages 2385-2414.
    2. Nicolai V. Kuminoff & Jaren C. Pope, 2014. "Do “Capitalization Effects” For Public Goods Reveal The Public'S Willingness To Pay?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 55(4), pages 1227-1250, November.
    3. Steve Gibbons & Stephan Heblich & Esther Lho & Christopher Timmins, 2016. "Fear of Fracking? The Impact of the Shale Gas Exploration on House Prices in Britain," SERC Discussion Papers 0207, Centre for Economic Performance, LSE.
    4. Edward W. Pinchbeck & Sefi Roth & Nikodem Szumilo & Enrico Vanino, 2023. "The Price of Indoor Air Pollution: Evidence from Risk Maps and the Housing Market," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 10(6), pages 1439-1473.
    5. Nicolai V. Kuminoff, 2018. "Can Understanding Spatial Equilibria Enhance Benefit Transfers for Environmental Policy Evaluation?," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 69(3), pages 591-608, March.
    6. Kathrine Graevenitz & Daniel Römer & Alexander Rohlf, 2018. "The Effect of Emission Information on Housing Prices: Quasi-Experimental Evidence from the European Pollutant Release and Transfer Register," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 69(1), pages 23-74, January.
    7. Brady P. Horn & Aakrit Joshi & Johanna Catherine Maclean, 2019. "Substance Use Disorder Treatment Centers and Property Values," NBER Working Papers 25427, National Bureau of Economic Research, Inc.
    8. Emmanuelle Lavaine, 2019. "Environmental risk and differentiated housing values," Post-Print hal-02048712, HAL.
    9. Lindgren, Samuel, 2018. "Traffic Noise and Housing Values: Evidence from an Airport Concession Renewal," Working papers in Transport Economics 2018:15, CTS - Centre for Transport Studies Stockholm (KTH and VTI), revised 26 Feb 2019.
    10. Bruijn, L. Michelle & Ribas, Rafael P., 2022. "“No drugs in my back yard:” The ambivalent reception of cannabis retailers," Journal of Economic Behavior & Organization, Elsevier, vol. 199(C), pages 103-121.
    11. H. Spencer Banzhaf, 2020. "Panel Data Hedonics: Rosen'S First Stage As A “Sufficient Statistic”," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 61(2), pages 973-1000, May.
    12. Nicolai V. Kuminoff & V. Kerry Smith & Christopher Timmins, 2010. "The New Economics of Equilibrium Sorting and its Transformational Role for Policy Evaluation," NBER Working Papers 16349, National Bureau of Economic Research, Inc.
    13. Bishop, Kelly C. & Timmins, Christopher, 2019. "Estimating the marginal willingness to pay function without instrumental variables," Journal of Urban Economics, Elsevier, vol. 109(C), pages 66-83.
    14. Lavaine, Emmanuelle, 2019. "Environmental risk and differentiated housing values: Evidence from the north of France," Journal of Housing Economics, Elsevier, vol. 44(C), pages 74-87.
    15. Moore, Michael R. & Doubek, Jonathan P. & Xu, Hui & Cardinale, Bradley J., 2020. "Hedonic Price Estimates of Lake Water Quality: Valued Attribute, Instrumental Variables, and Ecological-Economic Benefits," Ecological Economics, Elsevier, vol. 176(C).
    16. Michael Pollmann, 2020. "Causal Inference for Spatial Treatments," Papers 2011.00373, arXiv.org, revised Jan 2023.
    17. Lucija Muehlenbachs & Elisheba Spiller & Christopher Timmins, 2015. "The Housing Market Impacts of Shale Gas Development," American Economic Review, American Economic Association, vol. 105(12), pages 3633-3659, December.
    18. Albouy, David & Lue, Bert, 2015. "Driving to opportunity: Local rents, wages, commuting, and sub-metropolitan quality of life," Journal of Urban Economics, Elsevier, vol. 89(C), pages 74-92.
    19. Hua, Nan & Yang, Yang, 2017. "Systematic effects of crime on hotel operating performance," Tourism Management, Elsevier, vol. 60(C), pages 257-269.
    20. Kahn, Matthew E. & Walsh, Randall, 2015. "Cities and the Environment," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 405-465, Elsevier.

    More about this item

    Keywords

    Public goods; Complements; Amenities; Crime; Environmental amenities; Parks; Urban development;
    All these keywords.

    JEL classification:

    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:pubeco:v:182:y:2020:i:c:s0047272719301720. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505578 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.