A Quality of Life Index of Mexican cities: An equalizing-difference approach

The present analysis contains a Quality of Life Index (QLI) for most medium-large Mexican cities using the equalizing-difference approach. Implicit prices were constructed using two amenity bundles which include geographical, environmental, social factors such as climate, proximity to coast or metropolitan areas, public safety, quality of education, Access to health care as well as other local public goods. The ranking includes 92 medium-large cities (municipalities) from a subsample of the Household Income and Expenditure Survey. The results show that extreme temperaturas and criminality are clearly bad and have negative implicit prices. Other variables such as distance to hospitals and local taxes also have negative implicit prices. The quality of education, urban metropolitan areas, access to sea coast and federal transfers have a positive impact on households’ utility. Two different rankings are constructed using two slightly different amenity bundles to observe for consistency. The estimation of implicit prices shows that public safety and quality of basic education are the most valued external factors for Mexican households, followed by the to tertiary education.