Airport noise and housing values : an investigation into the hedonic theory of housing and the value of quiet

Abstract

The purpose of this dissertation is to extend the efforts to clarify the nature of airport noise on housing values. That noise from air traffic would lower housing values around urban airports seems intuitively obvious. Yet, until fairly recently such a proposition was difficult to prove or convincingly estimate. The application of the hedonic technique to housing has produced estimated relationships between airport noise and housing values that possess reasonable properties and seem to bear out the original contention that increasing levels of airport noise are associated with decreasing housing values. Even so, some questions remain concerning the nature of the relationship between airport noise and housing values (its properties and interpretation) and the specification of the models used to estimate it. The task of this dissertation is accomplished by demonstrating that, as a hedonic good, housing can be defined by a vector of characteristics which are arguments of the utility function and are available in different size bundles over the economic landscape. These characteristics, including quiet accessibility to economic activity, can then be said to have individual values associated with them which are observable even though the properties of the market forces which generate the observations have not been worked out. The relationship of the individual housing characteristic to the value of the overall bundle is shown to be determined by estimating an expenditure function for housing. The amount of information available from these estimates concerning market phenomena (primarily prices of individual characteristics) is then shown to depend on the properties of the model..