An alternative to the standard spatial econometric approaches in hedonic house price models

TY - JOUR

T1 - An alternative to the standard spatial econometric approaches in hedonic house price models

AU - von Graevenitz, Kathrine

AU - Panduro, Toke Emil

PY - 2015

Y1 - 2015

N2 - Omitted, misspecified, or mismeasured spatially varying characteristics are a cause for concern in hedonic house price models. Spatial econometrics or spatial fixed effects have become popular ways of addressing these concerns. We discuss the limitations of standard spatial approaches to hedonic modeling and demonstrate the spatial generalized additive model as an alternative. Parameter estimates for several spatially varying regressors are shown to be sensitive to the scale of the fixed effects and bandwidth dimension used to control for omitted variables. This sensitivity reflects the uncertainty associated with the estimates when the appropriate spatial scale of the controls is unknown.

AB - Omitted, misspecified, or mismeasured spatially varying characteristics are a cause for concern in hedonic house price models. Spatial econometrics or spatial fixed effects have become popular ways of addressing these concerns. We discuss the limitations of standard spatial approaches to hedonic modeling and demonstrate the spatial generalized additive model as an alternative. Parameter estimates for several spatially varying regressors are shown to be sensitive to the scale of the fixed effects and bandwidth dimension used to control for omitted variables. This sensitivity reflects the uncertainty associated with the estimates when the appropriate spatial scale of the controls is unknown.

U2 - 10.3368/le.91.2.386

DO - 10.3368/le.91.2.386

M3 - Journal article

SN - 0023-7639

VL - 91

SP - 386

EP - 409

JO - Land Economics

JF - Land Economics

IS - 2

ER -