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Working Paper 2006-026C

"Spatial Hedonic Models of Airport Noise, Proximity, and Housing Prices"
by Jeffrey P. Cohen, and Cletus C. Coughlin

Despite the refrain that housing prices are determined by “location, location, and location,” few studies of airport noise and housing prices have incorporated spatial econometric techniques. We compare various spatial econometric models and estimation methods in a hedonic price framework to examine the impact of noise on 2003 housing values near the Atlanta airport. Spatial effects are best captured by a model including both spatial autocorrelation and autoregressive parameters estimated by a generalized moments approach. In our preferred model, houses located in an area in which noise disrupts normal activities (defined by a day-night sound level of 70-75 decibels) sell for 20.8 percent less than houses located where noise does not disrupt normal activities (defined by a day-night sound level below 65 decibels). The inclusion of spatial effects magnifies the negative price impacts of airport noise. Finally, after controlling for noise, houses farther from the airport sell for less; the price elasticity with respect to distance is -0.15, implying that airport proximity is an amenity.

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Category > Regional Economics
Author > Cletus C. Coughlin
Research Papers and Publications: JEL Code > Q53
Research Papers and Publications: JEL Code > Q51
Research Papers and Publications: JEL Code > R31
Research Papers and Publications: JEL Code > L93
Research Papers and Publications: JEL Code > C21