Sorting models and economic evaluation of social and environmental (Dis)Amenities

One of the main approaches in the literature for estimating the economic value of the reduction in crime or the improvement in school performance is to use differences in house price changes to compute the willingness to pay for these improvements. However, such improvements are likely to change the social mix of the affected neighbourhoods. Failure to take into account selection effects leads to bias in the economic valuation of a variety of social and physical environmental effects. This project aimed to explore the impact of residential sorting on the economic valuation of (a) crime, (b) access to good schools, (c) environmental (dis)amenities and (d) proximity to social mix.

Image: c/o Flickr/Hobvlas Sudoneighm