Improving Air Quality Benefit Estimates from Hedonic Models

EPA Grant Number: R825826
Title: Improving Air Quality Benefit Estimates from Hedonic Models
Investigators: Thayer, Mark , Murdoch, James C. , Beron, Kurt
Institution: San Diego State University , The University of Texas at Dallas
EPA Project Officer: Chung, Serena
Project Period: October 1, 1997 through September 30, 1998
Project Amount: $124,931
RFA: Decision-Making and Valuation for Environmental Policy (1997) RFA Text |  Recipients Lists
Research Category: Environmental Justice


The objective of the research proposed herein is to critically examine the relative importance of data aggregation, attribute tradeoffs, and variation caused by space and time within a hedonic benefit study using a single, pooled cross-section, time-series data set. The primary focus will be on the hedonic price of air quality. The analysis will be conducted in the South Coast Air Basin, which consists of the California counties Los Angeles, Orange, Riverside, and San Bernadino for the period 1980-1996. These counties contain over one hundred cities, which will generate sufficient spatial variation to test the relative importance of community characteristics on hedonic price estimation. The extensive time series nature of the data will allow the required temporal variation.


We will use a hierarchical linear model (sometimes called a mixed model or a multilevel model) for our analysis of the relationship between air quality and housing prices. Our empirical analysis will employ the two techniques that are generally favored in the theoretical literature, full maximum likelihood and restricted maximum likelihood.

Expected Results:

The important outputs of our research will be: (1) an extensive pooled cross-section, time-series data set that will include approximately 50,000 observations per year over the study period, 1980-96; (2) the application of a new procedure to the task of estimating hedonic price functions; and (3) estimated marginal willingness to pay values that will be more suitable for benefits transfer. A set of case studies will become the benchmark for future benefits transfer work.

Publications and Presentations:

Publications have been submitted on this project: View all 8 publications for this project

Journal Articles:

Journal Articles have been submitted on this project: View all 2 journal articles for this project

Supplemental Keywords:

Benefits, air quality, hedonic pricing., RFA, Economic, Social, & Behavioral Science Research Program, Scientific Discipline, Geographic Area, State, Economics, decision-making, Ecology and Ecosystems, Economics & Decision Making, air pollution policy, ecosystem valuation, valuation, decision analysis, air quality benefit estimates, hierarchical linear model, standards of value, house prices, hedonic models, public values, willingness to pay, California (CA), benefits assessment

Progress and Final Reports:

  • Final Report