Green Online vs Green Offline preferences on local public goods trade-offs and house prices

Tubadji, Annie; Nijkamp, Peter

Abstract

© 2016 Elsevier Ltd This paper focuses on the relationship between (i) house prices and (ii) local green public goods. The main objective of the paper is to analyse a specific house-pricing mechanism which reflects the utility of being Green Offline, i.e. having access to green areas, versus the utility derived from the ability to be Green Online. The focus will be on data from European Union countries, and in particular Germany. Our results show that on an aggregate level for the EU there appears to be a clear indication for an irrational house-pricing mechanism, ignoring the negative trade-off effect from Green Online and Green Offline public investments (goods and assets). Meanwhile, on an individual level, for the case of Germany, more detailed bounded rationality effects of fashion-driven supply on house pricing are observed, positively related to Green Online values but negatively related to high Green Offline preferences. In conclusion, we find that house prices throughout Europe do not reflect a rational social change in green preferences, but tend to irrationally overprice Green Online values, which may create instability on the local housing market in the long run.

• Journal Article Type: Article
• Acceptance Date: Mar 1, 2017
• Online Publication Date: Nov 28, 2016
• Publication Date: Jun 1, 2017
• Journal: Socio-Economic Planning Sciences
• Print ISSN: 0038-0121
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 58
• Pages: 72-86
• DOI: https://doi.org/10.1016/j.seps.2016.11.001
• Keywords: house pricing, learning model, culture preferences, public goods, green online,green offline
• Public URL: https://uwe-repository.worktribe.com/output/885389
• Publisher URL: https://doi.org/10.1016/j.seps.2016.11.001