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Disentangling the effect of tolerance on housing values: how levels of human capital and race alter this link within the metropolitan area

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  • J. Sebastian Leguizamon

    (Western Kentucky University)

  • Susane Leguizamon

    (Western Kentucky University)

Abstract

Previous studies argue that homosexuals can affect house prices through two mechanisms: an esthetic–amenity premium and a tolerance (or open culture) premium. We find that this relationship varies with respect to areas with different compositions of educational attainment and race. While we find evidence of a premium in areas with higher share of college-educated individuals, we find no premium in low-educated areas. Based on the mechanisms above, these results suggest either that low-educated individuals and homosexuals diverge in their preferences for types of amenities, or that the open culture preference from buyers could be biased toward highly educated areas. Interestingly, the magnitude of the premium (or discount for areas with low shares of educated residents) is lower when the number of black residents increases. This suggests that the presence of blacks may help the ‘openness’ perception for areas with low levels of educational attainment, but also highlights differences in preferences for amenities between African-Americans and homosexuals.

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  • J. Sebastian Leguizamon & Susane Leguizamon, 2017. "Disentangling the effect of tolerance on housing values: how levels of human capital and race alter this link within the metropolitan area," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 59(2), pages 371-392, September.
    • Handle: RePEc:spr:anresc:v:59:y:2017:i:2:d:10.1007_s00168-017-0835-4
    DOI: 10.1007/s00168-017-0835-4
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    Cited by:

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    3. Joshua C. Hall & Donald J. Lacombe & Amir Neto & James Young, 2022. "Bayesian Estimation of the Hierarchical SLX Model with an Application to Housing Markets," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 46(2), pages 360-373, April.

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    More about this item

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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