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Estimating Inter-city Differences in the Price of Housing Services: Further Evidence 1

Author

Listed:
  • Robert Gillingham

    (Division of Price and Index Number Research, Office of Prices and Living Conditions, US Bureau of Labor Statistics)

  • John S. Greenlees

    (Division of Price and Index Number Research, Office of Prices and Living Conditions, US Bureau of Labor Statistics)

Abstract

This paper reconsiders an approach to inter-area house price index construction applied by Harvey Rosen in a recent article in Urban Studies. Rosen's cost function-based approach is shown to rely upon certain implicit assumptions regarding consumer preferences and housing production technology. Using FHA home purchase data, we estimate a more general production model and generate alternative inter-area indexes. Based on our results, Rosen's production technology assumptions are rejected. Further, the production-theoretic indexes are shown to differ only negligibly from a fixed-weight index using FHA data. Thus the difference which Rosen finds between the production-theoretic FHA and published BLS indexes does not result from Rosen's recognition of substitution in production, but because of very different data sources and scopes of coverage.

Suggested Citation

  • Robert Gillingham & John S. Greenlees, 1981. "Estimating Inter-city Differences in the Price of Housing Services: Further Evidence 1," Urban Studies, Urban Studies Journal Limited, vol. 18(3), pages 365-369, October.
    • Handle: RePEc:sae:urbstu:v:18:y:1981:i:3:p:365-369
    DOI: 10.1080/00420988120080661
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    References listed on IDEAS

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    1. Christensen, Laurits R & Jorgenson, Dale W & Lau, Lawrence J, 1975. "Transcendental Logarithmic Utility Functions," American Economic Review, American Economic Association, vol. 65(3), pages 367-383, June.
    2. Robert Gillingham, 1975. "Place to Place Rent Comparisons," NBER Chapters, in: Annals of Economic and Social Measurement, Volume 4, number 1, pages 153-178, National Bureau of Economic Research, Inc.
    3. Ernst R. Berndt & Laurits R. Christensen, 1973. "The Internal Structure of Functional Relationships: Separability, Substitution, and Aggregation," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 40(3), pages 403-410.
    4. Lau, Lawrence J., 1969. "Duality and the structure of utility functions," Journal of Economic Theory, Elsevier, vol. 1(4), pages 374-396, December.
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