USING SURVEY DATA TO STUDY CAPITALIZATION OF LOCAL PUBLIC SERVICES
Bjørg Langset, Jørn Rattsø og Lasse Stambøl.
We use surveys in which respondents evaluate local amenities in Norway
to compute proxy variables for the quality of local public services as
well as other local amenities relevant to location decisions. Average
satisfaction reported by the respondents is computed for each amenity
and each municipality, adjusted for sample variation in personal characteristics
and included as explanatory variables in a cross-section study of house
prices. We find that house prices are increasing in satisfaction with
health care, cultural activities and public transportation, suggesting
that the quality of local public services indeed affects the attractiveness
of a residential site. When the analysis is repeated with input measures
service levels instead of satisfaction variables, we find no effects of
local public services on house prices, indicating that traditional Tiebout
studies based on input measures may have underestimated the importance
of local public services for location decisions.