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Identification and estimation of hedonic models

Author

Listed:
  • Ivar Ekeland
  • James Heckman
  • Lars Nesheim
Abstract
This paper considers the identification and estimation of hedonic models. We establish that technology and preferences in a separable version of the hedonic model are genericallyidentified up to ane transformations from data on demand and supply in a single hedonicmarket. For a very general parametric structure, preferences and technology are fullyidentified from demand data. Much of the confusion in the empirical literature that claimsthat hedonic models estimated on data from a single market are fundamentally underidentifiedis based on linearizations that do not use all of the information in the model. Theexact economic model that justifies the linear approximations has strange properties sothe approximation is doubly poor. A semiparametric estimation method is proposed, andalternative estimators are considered. Instrumental variables estimators can be applied to identify technology and preference parameters from a single market even though there are no exclusion restrictions.

Suggested Citation

  • Ivar Ekeland & James Heckman & Lars Nesheim, 2002. "Identification and estimation of hedonic models," CeMMAP working papers 07/02, Institute for Fiscal Studies.
    • Handle: RePEc:azt:cemmap:07/02
    DOI: 10.1920/wp.cem.2002.0702
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    References listed on IDEAS

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    JEL classification:

    • C31 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models; Quantile Regressions; Social Interaction Models

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