A Hedonic Model of Environmental Justice
37 Pages Posted: 21 Feb 2006
Date Written: February 14, 2006
Past attempts to uncover evidence that economically disadvantaged groups are unjustly exposed to environmental disamenities have failed to take into account self-selection behavior of individuals or groups of individuals. For instance, when choosing a place to live, households may be trading environmental quality for other housing, neighborhood and location characteristics they care about. This paper proposes two types of tests that differ from previous studies of environmental equity. First, a hedonic pricing model is used to test for systematic price discrimination in real estate markets where environmental disamenities exist. Next, a test based on an endogenous choice model is proposed that incorporates the no-envy concept of economic equity. The results support a nding for environmental discrimination with respect to African American households, but do not suggest that poor households are unfairly exposed to environmental disamenities.
Keywords: Environmental Justice, Hedonic Price Models, Random Utility Models
JEL Classification: D63, Q3, A13
Suggested Citation: Suggested Citation