Unlocking Amenities: Estimating Public-Good Complementarity

77 Pages Posted: 1 Oct 2018

See all articles by David Albouy

David Albouy

University of Illinois at Urbana-Champaign

Peter Christensen

University of Illinois at Urbana-Champaign

Ignacio Sarmiento-Barbieri

Universidad de los Andes, Colombia - Department of Economics; University of Illinois at Urbana-Champaign

Date Written: September 2018

Abstract

Public goods may exhibit complementarities that are essential for determining their individual value. Our results indicate that improving safety near parks can turn them from public bads to goods. Ignoring complementarities may lead to i) undervaluing the potential value of public goods; ii) overestimating heterogeneity in preferences; and iii) understating the value of public goods to minority households. Recent reductions in crime have “unlocked” $5 billion in property value in Chicago, New York and Philadelphia. Still over half of the potential value of park proximity, over $10 billion, remains locked in.

Suggested Citation

Albouy, David and Christensen, Peter and Sarmiento-Barbieri, Ignacio, Unlocking Amenities: Estimating Public-Good Complementarity (September 2018). NBER Working Paper No. w25107, Available at SSRN: https://ssrn.com/abstract=3258205

David Albouy (Contact Author)

University of Illinois at Urbana-Champaign ( email )

Peter Christensen

University of Illinois at Urbana-Champaign ( email )

601 E John St
Champaign, IL 61820
United States

Ignacio Sarmiento-Barbieri

Universidad de los Andes, Colombia - Department of Economics ( email )

Carrera 1a No. 18A-10
Santafe de Bogota, AA4976
Colombia

HOME PAGE: http://https://ignaciomsarmiento.github.io/

University of Illinois at Urbana-Champaign ( email )

Urbana-Champaign, IL
United States

HOME PAGE: http://www.econ.illinois.edu/~ignacio

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