NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Estimating Housing Demand with an Application to Explaining Racial Segregation in Cities

Patrick Bajari, Matthew E. Kahn

NBER Working Paper No. 9891*
Issued in August 2003
NBER Program(s):   IO

We present a three-stage estimation procedure to recover willingness to pay for housing attributes. In the first stage, we estimate a non-parametric hedonic home price function. Second, we recover each consumer's taste parameters for product characteristics using first order conditions for utility maximization. Finally, we estimate the distribution of household tastes as a function of household demographics. As an application of our methods, we compare alternative explanations for why blacks choose to live in center cities while whites suburbanize.

*Published: Bajari, Patrick and Matthew E. Kahn. "Estimating Housing Demand With An Application To Explaining Racial Segregation In Cities," Journal of Business and Economic Statistics, 2005, v23(1,Jan), 20-33.

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