Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2014-04-22
Number: 14-047/VIII
Author-Name: Jan Rouwendal
Author-Workplace-Name: VU University Amsterdam
Author-Name: Ramona van Marwijk
Author-Workplace-Name: Kadaster
Author-Name: Or Levkovich
Author-Workplace-Name: VU University Amsterdam
Title: The Value of Proximity to Water in Residential Areas
Abstract: Proximity to water is appreciated by households. Hedonic analyses that try to measure the value of this amenity are potentially biased by omitted variables as locations close to the water may be selected by households with higher incomes who construct more luxury houses. Since it is difficult to observe all relevant characteristics, the coefficient for proximity to water may be biased upwards.
We circumvent this problem by exploiting a specific characteristic of the Dutch system of planned residential development: often a number of identical houses are
constructed close to each other. By comparing the values of such identical houses, we can measure the effect of proximity to water under almost ideal circumstances.
The results show a significant impact of this amenity, but of a smaller magnitude than was suggested by many earlier studies, thereby confirming the conjectured presence of omitted variable bias.
Classification-JEL: D12, D61, R21
Keywords: hedonic analysis, local amenities, ommited variable bias
File-Url: https://papers.tinbergen.nl/14047.pdf
File-Format: application/pdf
File-Size: 2577361 bytes
Handle: RePEc:tin:wpaper:20140047