Robust hedonic price indexes
International Journal of Housing Markets and Analysis
ISSN: 1753-8270
Article publication date: 7 March 2016
Abstract
Purpose
The purpose of this paper is to demonstrate the application of robust techniques to the estimation of hedonic house price indexes.
Design/methodology/approach
The authors use simulation analysis to compare an index estimated using ordinary least squares (OLS) with several indexes estimated using robust techniques. The analysis uses sales transactions data from a US city. The authors then explore how robust methods can correct for omitted variables under some circumstances and how they affect the revision problem that occurs when longitudinal hedonic indexes are updated.
Findings
Robust methods can resolve missing variable problems in some circumstances and also can substantially reduce the revision problem in longitudinal hedonic indexes.
Practical implications
Robust techniques may be preferable to OLS when constructing longitudinal hedonic indexes.
Originality/value
This is the first paper to undertake a systematic analysis of the applicability of robust techniques in constructing hedonic house price indexes.
Keywords
Citation
Bourassa, S.C., Cantoni, E. and Hoesli, M. (2016), "Robust hedonic price indexes", International Journal of Housing Markets and Analysis, Vol. 9 No. 1, pp. 47-65. https://doi.org/10.1108/IJHMA-11-2014-0050
Publisher
:Emerald Group Publishing Limited
Copyright © 2016, Emerald Group Publishing Limited