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PANEL DATA HEDONICS: ROSEN'S FIRST STAGE AS A “SUFFICIENT STATISTIC”
Author(s) -
Banzhaf H. Spencer
Publication year - 2020
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/iere.12446
Subject(s) - endogeneity , econometrics , economics , statistic , point (geometry) , construct (python library) , panel data , set (abstract data type) , willingness to pay , measure (data warehouse) , order (exchange) , product (mathematics) , welfare , marginal utility , marginal cost , microeconomics , mathematics , statistics , computer science , market economy , programming language , geometry , finance , database
Traditional cross‐sectional estimates of hedonic price functions can recover marginal willingness to pay for characteristics, but face endogeneity problems for estimating nonmarginal welfare measures. This article shows that when panel data on household demands are available, one can construct a second‐order approximation to nonmarginal welfare measures using only the first‐stage marginal prices. With repeated cross sections of product prices, the measure can be set identified or, under a single‐crossing restriction, point identified. Bounds also can be constructed when there are mobility costs. Finally, a variant remains valid when individual preferences shift over time.