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The Annals of Regional Science

, Volume 51, Issue 2, pp 377–409 | Cite as

Differences in quality of life estimates using rents and home values

  • John V. Winters
Original Paper

Abstract

Quality of life differences across areas can be measured by differences in “real wages,” where real wages are computed as nominal wages adjusted for the cost of living. Computing cost of living differences involves several important issues, including how housing prices should be measured. Previous researchers typically have used some combination of rental payments and homeowner housing values, but housing values are forward-looking and may not reflect current user costs. This paper examines differences in quality of life estimates for US metropolitan areas using, alternatively, rents and housing values. We find that the two measures of quality of life are highly correlated. Value-based estimates, however, are considerably more dispersed than rent-based estimates, likely because of the recent housing bubble and because housing values often provide an imperfect measure of the present user cost of housing.

JEL Classification

R13 R21 R23 

Notes

Acknowledgments

The author would like to thank Barry Hirsch, three anonymous referees, and session participants at the 2009 annual meeting of the Southern Economic Association for helpful comments.

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Copyright information

© Springer-Verlag Berlin Heidelberg 2013

Authors and Affiliations

  1. 1.Department of EconomicsUniversity of CincinnatiCincinnatiUSA

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