Objective versus Subjective Measures of Water Clarity in Hedonic Property Value Models

Abstract

This paper examines and compares objective, scientific measures of environmental quality with subjective measures of individuals’ perceptions obtained from survey information within the context of hedonic property value models. The specific application is to water clarity of freshwater lakes in Maine. Non-nested, J-test results indicate that the objective measure of water clarity was either preferred, or equally preferred, to the subjective measure for explaining variation in sale prices. These results are promising for hedonic applications employing scientific measures of environmental quality, however robustness of these results to other environmental amenities, and more complex environmental quality measuresare of course needed. (JEL Q25)