Consumer choice of dwelling, neighborhood and public services

Abstract

Previous microeconomic analyses of consumer choice in the housing market have either assumed the independence of irrelevant alternatives or have represented housing heterogeneity by some arbitrary aggregation of dwellings. This paper presents an empirical analysis of housing choice based upon individual households and dwellings which also estimates the degree of independence of neighborhood and dwelling characteristics. The empirical results suggest that the independence assumption may be inappropriate and also that housing choice may be more sensitive to variations in workplace accessibility than is indicated by the more restricted model of household choice.