The Accuracy of Owner-Provided House Values: The 1978–1991 American Housing Survey

The American Housing Survey (AHS) includes the owner's valuation of the house as a measure of the house's value. If owner-stated values are accurate, the AHS (as well as other survey instruments) can be used by researchers studying a variety of topics. In this study we use the metropolitan version of the AHS for three cities over fourteen years to compare owners' valuations with sales prices of houses that sold in the twelve months prior to an interview. We find that, on average, recent buyers report house values that are 8.4% higher than the stated sales prices. Further analysis indicates that these recent buyers, when compared with owners with longer tenure, overvalue their houses by 3.3%, on average. Thus, we find that the average owner overvalues his house by 5.1%. Also, differences between sales prices and owners' valuations are not related to particular characteristics of the house, occupants (other than length of tenure), or neighborhood. Thus, the use of the owners' valuations will result in accurate estimates of house price indexes and will provide reliable estimates of the prices of house and neighborhood characteristics.     

Price-making in a competitive market

An attempt is made to analyze the behavior of a price-maker in a purely competitive market. Assuming the price-maker maximizes expected profit subject to the constraint of satisfying periodic excess demand, we derive characteristics of his optimal prices as they depend on current state variables and then obtain properties of the expectation and variance of the long-run stationary probability distribution of price.     

Competitive price adjustment

A study is made of a competitive trading process in which a price-maker calls prices periodically under the obligation of trading for his own account to satisfy excess demand. Characteristics of the price-maker's optimal behavior are derived. The price-maker system is evaluated with respect to an alternative market clearing system.     

A Dynamic Model of the Housing Market: The Role of Vacancies

While the hedonic property value model and recently developed computable general equilibrium urban models assume the housing market is in equilibrium, recent years have witnessed extreme circumstances such as large changes in housing prices, high levels of mortgage default, and high levels of foreclosure that bring into question this assumption. This highlights the need for a better understanding of the dynamics of the housing market and the mechanisms that drive and sustain periods of disequilibrium. In this analysis, I develop a dynamic model of the housing market where vacancies naturally arise as the error correction mechanism. I estimate this model using annual U.S. panel data at the MSA level for 1990–2011. The results show that when there is excess demand, prices rise when vacancies fall but prices do not fall when there is excess supply and vacancies rise. This is consistent with the belief that prices are sticky downwards and hence prolong housing downturns. On the other hand, when there is excess supply, there is a relatively stronger decline in new housing in response to a rise in vacancies and much less of a new housing reaction when there is excess demand and vacancies fall. Furthermore, when I allow for a structural shift in the housing market brought on by the Great Recession (2006–2011), I find that the housing market became more responsive on both sides – excess supply and demand – during this period.     

Optimal design of pro-conservation incentives

Payments for environmental services (PES) schemes have become an increasingly accepted and popular mode for governmental and non-governmental agencies to use in addressing local and regional declines in ecosystem services. In PES schemes, payments can either be tied to indicators of actions for service provision or to indicators of the generated service itself. Performance payments are synonymous for this second group, i.e. payments are completely contingent on the procurement of an environmental good or service. Such a focus raises several practical issues during implementation. We review and translate key aspects of the economic theory of incentives into the context of performance payment schemes with special attention paid to two practical issues: risks outside the individual's control and distortion in the measurement of environmental services. Four different incentive payment approaches are presented and the effects of risk and distortion on optimal incentives are discussed. The investigation of each payment approach is accompanied by a discussion of examples from the field.     

Evaluating the Usefulness of the American Housing Survey for Creating House Price Indices

The American Housing Survey (AHS) is a valuable source of information on houses and occupants over time. The AHS has several advantages over sales data for use in the creation of price indices: it is readily available, has frequent observations over time and space, has data from the late 1970s through the mid-1990s, includes houses that do not sell, as well as those that do, and has information on the occupants. The drawbacks include: a time lag between the interview and the release of the data, data suppression issues, owner-stated house values, and a lack of neighborhood information. In this study, we use the metropolitan version of the AHS, which has been supplemented with the original survey data as well as Census tract data for three cities over 14 years to examine whether the AHS can be used to create indices. Indices are estimated using hedonic, repeat valuation, and hybrid techniques, overcoming some of the problems inherent in the estimation of indices. We find that the data-suppression issues and the owner-stated house values are not problematic. The biggest drawback of the AHS is its lack of objective information on neighborhood quality.     

Comparing Conventional and New Policy Approaches for Carnivore Conservation: Theoretical Results and Application to Tiger Conservation

New policy approaches to facilitate the co-existence of wildlife and livestock are needed for situations where predation incidents greatly impact households’ income and retaliatory killing threatens endangered carnivore species’ survival. In this paper, models are developed to assess how two alternative policy approaches impact a herder’s decisions on carnivore hunting and livestock protection. We find that while the well-established ex-post compensation policy induces suboptimal livestock protection it can generate sufficient incentives for the herder to refrain from hunting so that the carnivore population reaches its socially optimal level. Performance payments are proposed as alternative policy. They are found not to distort livestock protection incentives and can also help achieve a socially optimal carnivore population level. Which of the two scheme types gives rise to less cost is ambiguous. An empirical analysis of the model with data from tiger-livestock conflicts in India is presented.     

Controlling for Quality in House Price Indices

Given the importance of house prices it is not surprising that house price indices are used for many purposes. One of the factors that differentiates these indices is the house price determinants (such as structural characteristics and neighborhood quality) that are accounted for—that is, held constant. Indices are usually generated from house price regressions. It is shown that, regardless of the desired level of accounting, it is necessary to control for all significant determinants of house prices in these regressions to obtain unbiased estimates of the growth in house prices. An empirical example shows that not controlling for neighborhood quality can lead to substantial biases in estimates of house price appreciation rates even if the index does not account for this factor.     

The impact of the Self‐Sufficiency Project on the employment behaviour of former welfare recipients

Abstract The Self‐Sufficiency Project (SSP) was a Canadian randomized trial in which the program group had 12 months to find full‐time employment in order to qualify for a subsidy that roughly doubled their pre‐tax earnings for the next three years. We find evidence of significant impacts of SSP on non‐employment and employment durations. For the treated group, simulation results show an impact on the employment rate at 52 months after random assignment in the range of 7 to 11 percentage points; this is approximately a 25% increase in the employment rate compared with having no treatment in place.