The standard revealed-preference hedonic estimate of a city’s quality of life is proportional to that city’s cost-of-living relative to its wage-level. Adjusting the standard hedonic model to account for federal taxes, non-housing costs, and non-labor income produces quality-of-life estimates different from the existing literature. The adjusted model produces city rankings positively correlated with popular-literature and stated-preference rankings, and predicts how housing costs rise with wage levels, controlling for amenities. Mild seasons, sunshine, and coastal location account for most quality-of-life differences; once these amenities are accounted for, quality of life does not depend on city size, contrary to previous findings.
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This paper was revised on July 6, 2009
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