Valuing Urban Lakeview Amenities Using Implicit and Contingent Markets

Abstract

Amenities influence individual location decisions and affect overall social well being. This comparative study focuses on the potential complementarity of implicit and contingent market approaches to valuing amenities. Lakeshore residents in Chicago were surveyed to collect data to estimate implied housing hedonic values and contingent values for two view-related amenities. The consumers in the housing market and the bidders in the contingent market are the exact same people. Presumably differences in estimates are primarily due to the different approaches. For willingness to pay, contingent values are found to be within a factor of two of implicit values. The difference is consistent with sorting which occurs in the housing market. The results provide further evidence of progress in valuing amenities.