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Economic return of architecture awards: Testing homebuyers’ motives for paying more

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  • Liao, Wen-Chi
  • Jing, Kecen
  • Lee, Chaun Ying Rachel

Abstract

Architecture awards can increase the value of the winning properties, especially international accolades. This architecture award premium emerges only after the win and is orthogonal to the building's intrinsic aesthetic. The identification exploits a fact: Not all of the comparable, deserving projects succeed eventually. Propensity score matching isolates unwanted selection for treatment and preserves desired randomness, allowing difference-in-differences to compare projects having a similar chance of winning. We find a 5.4% architecture award premium in Singapore's housing market. Three different tests validate the common trend assumption. By triple-differences analyses, the award premium mainly belongs to large homes. It is unresponsive to construction quality and project visibility and decreases with winning projects' supply. A positive halo effect exists. These results lend much support to conspicuous consumption, among possible homebuyers' motives.

Suggested Citation

  • Liao, Wen-Chi & Jing, Kecen & Lee, Chaun Ying Rachel, 2022. "Economic return of architecture awards: Testing homebuyers’ motives for paying more," Regional Science and Urban Economics, Elsevier, vol. 93(C).
    • Handle: RePEc:eee:regeco:v:93:y:2022:i:c:s0166046221000831
    DOI: 10.1016/j.regsciurbeco.2021.103723
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    Cited by:

    1. Jing, Kecen & Liao, Wen-Chi, 2023. "Small things, big impact: The network-mediated spillover effect through a transport connectivity enhancement project," Regional Science and Urban Economics, Elsevier, vol. 101(C).

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    More about this item

    Keywords

    Architecture award premium; Conspicuous consumption; Propensity-score-matching difference-in-differences (PSM-DD); Property prices; Real estate branding; Triple-differences (DDD);
    All these keywords.

    JEL classification:

    • Z11 - Other Special Topics - - Cultural Economics - - - Economics of the Arts and Literature
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

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