Measuring Housing Quality Using Revealed Preference: A Geographic PageRank Approach

Abstract

This paper introduces Geographic PageRank (GPR), an innovative measure of locational desirability that leverages migration decisions to assess housing quality at the neighborhood level. Conceptually, GPR employs a recursive algorithm that uses the full network of migration flows to derive a micro-founded measure of place quality. Our GPR measure can be particularly useful in settings where unobserved housing quality has led to biased, or even wrong-signed, estimates for standard hedonic regressions of housing prices on amenities. We also demonstrate how the GPR framework can be extended to finer geographic units and adapted to capture temporal dynamics, providing a versatile tool for housing analysis.

Keywords: PageRank, Housing and Neighborhood Quality, Amenities

JEL Classification: R32, R31, C39