On Hedonic Valuation of Urban Amenities Using Unbalanced Data

Valerie Mueller and Glenn Sheriff

Abstract

Hedonic valuation of urban amenities often requires estimating housing and labor market regressions. It is difficult to get both types of data for all survey respondents. We show that the common practice of conducting two separate regressions with unbalanced data causes inconsistent covariance matrix estimation and improper inference regarding amenity values. We demonstrate how two easily implementable yet consistent techniques can be used for hedonic valuation with an application in valuing temperature increases in urban Brazil. (JEL C31, Q51)

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