Measuring the Monetary Value of Social Relations: A Hedonic Approach

25 Pages Posted: 14 Oct 2013

See all articles by Emilio Colombo

Emilio Colombo

Catholic University of the Sacred Heart of Milan

Luca Stanca

University of Milan, Bicocca - Department of Economics; Università degli Studi di Milano-Bicocca - Center for Interdisciplinary Studies in Economics, Psychology & Social Sciences (CISEPS); Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS)

Date Written: October 14, 2013

Abstract

This paper presents an application of the hedonic approach to measure the monetary price of social relations. We use individual-level data for housing and labor markets in 103 Italian cities to estimate the price of relational amenities and construct monetary indexes of quality of relational life. We focus on time spent with friends, active participation in associations and frequency of going out for leisure activities, while controlling for standard amenities such as weather, environment, services, and socio-demographic characteristics. We find that individuals are willing to pay a positive and significant monetary price to live in cities where people spend more time with their friends. A one standard deviation increase in the share of those who meet their friends most frequently is worth an extra €1,150 per year in terms of higher housing costs and foregone wages.

Keywords: A13, C4, D6, I31, R2, Z13

JEL Classification: social relations, social capital, hedonic prices, quality of life, well-being.

Suggested Citation

Colombo, Emilio and Stanca, Luca, Measuring the Monetary Value of Social Relations: A Hedonic Approach (October 14, 2013). University of Milan Bicocca Department of Economics, Management and Statistics Working Paper No. 256. Available at SSRN: https://ssrn.com/abstract=2339923 or http://dx.doi.org/10.2139/ssrn.2339923

Emilio Colombo

Catholic University of the Sacred Heart of Milan ( email )

Largo Gemelli, 1
Via Necchi 9
Milan, MI 20123
Italy

Luca Stanca (Contact Author)

University of Milan, Bicocca - Department of Economics ( email )

Piazza dell'Ateneo, Nuovo I
Milan 20126
Italy

Università degli Studi di Milano-Bicocca - Center for Interdisciplinary Studies in Economics, Psychology & Social Sciences (CISEPS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milano, 20126
Italy

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milan, 20126
Italy

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