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Occupant Well-Being and House Values

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Abstract

Recent research indicates that the subjective evaluation of well-being increases when conditions of housing are improved. This suggests that subjective well-being might serve as a useful proxy for characteristics of a home or neighbourhood that are relevant to an occupant, but unobserved by the analyst. In this paper, we assess this idea through analysis of residential property valuation, using a sample of 95,413 respondents matched to house sales for 2000 to 2012 in the North of the Netherlands. Using a spatial econometric approach, we find a significant and positive association between individual and regional subjective well-being and house prices. This suggests that house buyers are willing to pay more for, or that house sellers require greater compensation to sell and move from, properties and areas in which the resident experiences greater happiness. Our study provides the first estimates of the importance of these effects.

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  • Richard H. Rijnks & Stephen Sheppard, 2020. "Occupant Well-Being and House Values," Department of Economics Working Papers 2020-09, Department of Economics, Williams College.
    • Handle: RePEc:wil:wileco:2020-09
    Note: This is a revision of WP 2018-05 and WP 2019-23
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    More about this item

    Keywords

    Subjective well-being; house price; hedonic model;
    All these keywords.

    JEL classification:

    • D91 - Microeconomics - - Micro-Based Behavioral Economics - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making
    • R2 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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