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Why Do Landlords Include Utilities in Rent? Evidence from the 2000 Housing Discrimination Study (HDS) and the 2002 American Housing Survey (AHS)

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  • Choi, Seok Joon
  • Kim, Sangsin

Abstract

This study assesses the decision to include utilities in the rent and the effect of this decision on rents. We utilize individual house-level data from the 2000 Housing Discrimination Study (HDS) and 2002 American Housing Survey (AHS), and determine that the cost of meter installation is not the only reason that utility costs are included in rent. We find evidence that landlords include utilities in the rent to attract more customers. Additionally, our findings demonstrate that utility inclusion behavior differs significantly between old and new building owners. For the hedonic rent estimation, we find that the decision to include the cost of utilities in the rent raises rent.

Suggested Citation

  • Choi, Seok Joon & Kim, Sangsin, 2012. "Why Do Landlords Include Utilities in Rent? Evidence from the 2000 Housing Discrimination Study (HDS) and the 2002 American Housing Survey (AHS)," Journal of Housing Economics, Elsevier, vol. 21(1), pages 28-40.
    • Handle: RePEc:eee:jhouse:v:21:y:2012:i:1:p:28-40
    DOI: 10.1016/j.jhe.2012.02.001
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    References listed on IDEAS

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    1. Levinson, Arik & Niemann, Scott, 2004. "Energy use by apartment tenants when landlords pay for utilities," Resource and Energy Economics, Elsevier, vol. 26(1), pages 51-75, March.
    2. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    3. Margery A. Turner & Stephen Ross & George C. Galster & John Yinger, 2002. "Discrimination in Metropolitan Housing Markets: National Results from Phase 1 of the Housing Discrimination Study (HDS)," Working papers 2002-16, University of Connecticut, Department of Economics.
    4. Dewees, Donald N & Wilson, Thomas A, 1990. "Cold Houses and Warm Climates Revisited: On Keeping Warm in Chicago, or Paradox Lost: Comment," Journal of Political Economy, University of Chicago Press, vol. 98(3), pages 656-663, June.
    5. Friedman, David, 1987. "Cold Houses in Warm Climates and Vice Versa: A Paradox of Rational Heating," Journal of Political Economy, University of Chicago Press, vol. 95(5), pages 1089-1097, October.
    6. Jan Ondrich & Stephen Ross & John Yinger, 2003. "Now You See It, Now You Don't: Why Do Real Estate Agents Withhold Available Houses from Black Customers?," The Review of Economics and Statistics, MIT Press, vol. 85(4), pages 854-873, November.
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    Cited by:

    1. Todd D. Gerarden & Richard G. Newell & Robert N. Stavins, 2017. "Assessing the Energy-Efficiency Gap," Journal of Economic Literature, American Economic Association, vol. 55(4), pages 1486-1525, December.
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    4. Giraudet, Louis-Gaëtan, 2020. "Energy efficiency as a credence good: A review of informational barriers to energy savings in the building sector," Energy Economics, Elsevier, vol. 87(C).
    5. Guang Hu & Yue Tang, 2023. "GERPM: A Geographically Weighted Stacking Ensemble Learning-Based Urban Residential Rents Prediction Model," Mathematics, MDPI, vol. 11(14), pages 1-36, July.

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    More about this item

    Keywords

    H39; R22; R38; R20; J71; Landlord; Rental agent; Utility; Metering cost; Hedonic Price Model; Rent;
    All these keywords.

    JEL classification:

    • H39 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Other
    • R22 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Other Demand
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy
    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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