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Green Buildings: Similar to Other Premium Buildings?

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Abstract

The statistics, finance, and real estate literature regularly rely on propensity score matching techniques to balance samples of data where randomized treatment assignment is not possible. In the sustainable commercial real estate literature the technique has seen substantive use. To analyze price and rent premiums for green buildings, several studies have used propensity scores to ensure samples that contains eco-labeled and un-labeled buildings reflect a randomized assignment of the treatment. Underpinning the argument for the use of propensity scores is the notion that green buildings contain similar attributes to non-green buildings. However, if the green labels were ignored, would premium buildings be otherwise statistically similar to premium buildings in the market? Here, we analyze a research question focusing on the extent to which propensity scores can predict a green building using the standard building attributes and whether propensity scoring is an econometric necessity?

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Authors and Affiliations

  1. Central Michigan University, SL 301, Mt Pleasant, MI, 48859, USA

    Spenser J. Robinson

  2. University of Arizona, 1040 N. Olive Rd, Tucson, AZ, 85716, USA

    Andrew R. Sanderford

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  1. Spenser J. Robinson
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  2. Andrew R. Sanderford
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Correspondence to Andrew R. Sanderford.

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Robinson, S.J., Sanderford, A.R. Green Buildings: Similar to Other Premium Buildings?. J Real Estate Finan Econ 52, 99–116 (2016). https://doi.org/10.1007/s11146-015-9498-z

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  • DOI: https://doi.org/10.1007/s11146-015-9498-z

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