The Role of Public Information in Increasing Homebuyers’ Willingness-to-Pay for Green Housing: Evidence from Beijing

Posted: 11 Nov 2019

See all articles by Li Zhang

Li Zhang

Tsinghua University - Hang Lung Center for Real Estate

Cong Sun

Tsinghua University

Hongyu Liu

Tsinghua University - Institute of Real Estate Studies

Siqi Zheng

Massachusetts Institute of Technology (MIT) - Center for Real Estate; Massachusetts Institute of Technology (MIT) - Department of Urban Studies & Planning; Hang Lung Center for Real Estate, Tsinghua University

Date Written: October 30, 2019

Abstract

To explain the weak demand for green housing in Chinese cities, researchers point to the lack of reliable and accurate information to convince owners to invest, yet there is little concrete evidence that such information would in fact promote homebuyers' investment in green housing. We implement an information experiment in Beijing. We select two pairs of residential complexes – each pair has two complexes located in the same housing submarket, and one is green while the other is not. We ask the respondents' willingness to buy a new green housing unit, and, if yes, the price premium they are willing to pay. Then we show them an information card that documents that green apartments outperform their non-green counterparts in terms of several indoor environmental indicators, and then ask them the same two questions. We find that dwellers living in green complexes present a significantly higher initial willingness-to-pay for greenness, but this difference narrows significantly after our information treatment, as the non-green-complex dwellers' willingness-to-pay for greenness increases dramatically. This inspiring result suggests that Chinese urban households will be encouraged to purchase green housing if they are provided more reliable and concrete information.

Suggested Citation

Zhang, Li and Sun, Cong and Liu, Hongyu and Zheng, Siqi, The Role of Public Information in Increasing Homebuyers’ Willingness-to-Pay for Green Housing: Evidence from Beijing (October 30, 2019). Available at SSRN: https://ssrn.com/abstract=3478240

Li Zhang

Tsinghua University - Hang Lung Center for Real Estate ( email )

HeShanHeng Building
Beijing, 100084
China

Cong Sun

Tsinghua University ( email )

Hongyu Liu

Tsinghua University - Institute of Real Estate Studies ( email )

School of Civil Engineering
Beijing, 100084
China
8610-62795115 (Phone)
8610-62788678 (Fax)

Siqi Zheng (Contact Author)

Massachusetts Institute of Technology (MIT) - Center for Real Estate ( email )

Building 9-323
Cambridge, MA 02139
United States

HOME PAGE: http://https://siqizheng.mit.edu/

Massachusetts Institute of Technology (MIT) - Department of Urban Studies & Planning ( email )

77 Massachusetts Avenue
Cambridge, MA 02139
United States

Hang Lung Center for Real Estate, Tsinghua University ( email )

HeShanHeng Building
Beijing, 100084
China

HOME PAGE: http://https://siqizheng.mit.edu/

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