Using hedonic indexes to measure housing quantity

by C. Lance Barnett

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Appraises the ability of a hedonic index to measure changes in the quantity of housing service. The index was fit with data describing the 1974 rental housing market in Brown County, Wisconsin, one of two metropolitan counties where the Housing Assistance Supply Experiment is being conducted. To demonstrate the index's analytical worth, the report shows how household income influences consumption of four summary attributes: location, space, interior quality, and exterior quality. In general, housing attributes most likely to change over time least affect housing service, and conversely. That fact implies that the index should inadequately measure intertemporal changes because such changes would be small, but the index should accurately measure cross-sectional differences.

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