Semester

Spring

Date of Graduation

2010

Document Type

Dissertation

Degree Type

PhD

College

Chambers College of Business and Economics

Department

Economics

Committee Chair

Russell Sobel

Abstract

This dissertation is comprised of three essays in which I examine the influence that the size of the neighbors' houses have on predicted house price. I estimate the associated effect of a change in neighbor house size on predicted house price, how the effect changes when considering different reference groups, and how the effect changes when considering observations along the distribution. The analysis of results are framed within the context of behavioral explanations which are then compared to previous results regarding housing consumption behavior and status symbol consumption behavior. In Chapter 2 I estimate the change in predicted house price associated with an increase in the average size of the nearest neighbors' house size using a spatial autoregressive model. I find that individuals value an increase in absolute house size significantly more than they value a decrease in the size of the neighbors' house and yard. In Chapter 3 I use a spatial autoregressive hedonic model to examine change in predicted house price associated with a change in house size of four different reference groups: nearest neighbors, surrounding neighborhoods, the largest houses in the district and the smallest houses in the district. I find a positive associated effect of an increase in average house size of further neighbors and the smallest houses and a negative associated effect of an increase in the average house size of the nearest and largest houses. In Chapter 4 I use a spatial quantile model to estimate the associated effect for the 10 th%, the 25th%, the 50th%, the 75 th%, and the 90th%. I find consumers of the houses in the lower quantile of housing prices and the upper quantile of housing prices to exhibit an insignificant and small change in predicted house price associated with a change in the house size of the nearest neighbors. It is the consumers of houses in the middle and middle-upper housing price quantile which exhibit a significant and negative associated effect. These findings suggest that policies which redistribute may not be justified on the grounds of increased social welfare.

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