An Embarrassment Of Riches

Confronting Omitted Variable Bias And Multiscale Capitalization In Hedonic Price Models

Joshua Abbott, H. Allen Klaiber

Research output: Contribution to journalArticle

47 Citations (Scopus)

Abstract

Many researchers have addressed concerns of omitted variable bias in hedonic price models through the use of spatial fixed effects. We argue that this approach does not consider the biases introduced by effects that overlap the zone of capitalization for nonmarket goods. We show this bias can dominate the usual omitted variable bias using data on developerprovided open space. We control for multiscale capitalization and omitted variables simultaneously by extending the Hausman-Taylor estimator where the panel component of the estimator is defined over repeated transactions within neighborhoods rather than the traditional definition following a unique cross-sectional unit through time.

Original languageEnglish (US)
Pages (from-to)1331-1342
Number of pages12
JournalReview of Economics and Statistics
Volume93
Issue number4
DOIs
StatePublished - Nov 2011

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trend
nonmarket good
transaction
Capitalization
Estimator
Hedonic price model
Omitted variable bias
Fixed effects
Omitted variables
Open space
time

ASJC Scopus subject areas

  • Economics and Econometrics
  • Social Sciences (miscellaneous)

Cite this

An Embarrassment Of Riches : Confronting Omitted Variable Bias And Multiscale Capitalization In Hedonic Price Models. / Abbott, Joshua; Klaiber, H. Allen.

In: Review of Economics and Statistics, Vol. 93, No. 4, 11.2011, p. 1331-1342.

Research output: Contribution to journalArticle

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