A Hedonic Approach
Chapter 8: Hedonic Price Method in Estimating the Value of Environment and Institutional Regulation
8. Hedonic price method in estimating the value of environment and institutional regulation INTRODUCTION In this chapter, we examine several cases concerning the estimation of environmental values and the value of institutional measures using the hedonic price method. One of the strengths of the hedonic approach is that it enables us to depict the preferences of past consumers by a simple procedure using market price data. We can see the changes in consumer preference and the dynamics of a society from these analyses. After giving an example of this, we go on to present various estimations of implicit prices of environment and institutional regulation. CHANGES IN CONSUMER PREFERENCE ON AN UPPER-CLASS HOUSING ESTATE IN TOKYO, 1934 AND 1985 In any large urban areas in the world, there are several prestigious, exclusive or upper-class housing estates. Denenchofu, which developed in the 1920s, and literally means garden suburb in Chofu, is a good example in Tokyo. We shall examine the preference changes of the people on this housing estate during 1934 and 1985 (Yamaguchi and Hidano, 1988, cited in Hidano, 1997). We collected the sales price data in 1934 for the estate from a real estate agent’s brochure because we did not have any oﬃcial detailed site-speciﬁc data for that year. In order to understand the changes in preferences, we use assessed land prices from a map of 1972 and of 1985 published by the Tokyo Real 71 72 The economic valuation of the environment and public policy Estate Association,...
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