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Journal Article
Aviation security and terrorism: a review of the economic issues
Following the terrorist attacks on September 11, 2001, the passage of the Aviation and Transportation Security Act mandated a substantial increase in resources devoted to aviation security. This paper summarizes the specific changes stemming from this legislation. In addition, the paper examines the economic issues underlying the regulation and provision of aviation security. The fact that security at one airport can affect the well being of those at other airports and elsewhere, an example of a network externality (spillover), provides an economic justification for governmental involvement ...
Journal Article
The boom and bust of U.S. housing prices from various geographic perspectives
This paper summarizes changes in housing prices during the recent U.S. boom and bust from various geographic perspectives. Nationally, the Standard & Poor?s/Case-Shiller house price index more than doubled in nominal terms during the boom and has fallen by roughly a third subsequently. During the boom, housing prices tended to rise much faster in metropolitan areas in the East and West Coast regions than in the country?s interior. After adjusting for inflation, 7 of 19 metropolitan areas have experienced real declines in housing prices from the start of the boom to the present. Although ...
Journal Article
Sales of Distressed Residential Property: What Have We Learned from Recent Research?
During the housing bust many homeowners found themselves ?underwater??the amount they owed on their mortgages exceeded the value of the associated property?and they either could not or possibly chose not to stay current on their mortgage payments. As a consequence, sales of so-called distressed properties, often after a foreclosure, became commonplace. This spurred numerous research papers on various related issues. The authors? review summarizes the research findings on three topics: the impact of changes in housing prices on foreclosures; the impact of foreclosure on the sales price of the ...
Working Paper
Spatial heterogeneity and the geographic distribution of airport noise
One might expect that houses closer to an airport and those in higher minority population neighborhoods experience more airport noise. We find evidence supporting these conjectures when estimating a standard ordered probit model for houses sold near the Atlanta airport. However, because the various neighborhood demographics surrounding the airport can be heterogeneous, and the noise contours are not necessarily correlated with distance in certain neighborhoods, we hypothesize that the impacts of explanatory variables on the probability of greater noise vary across space. We explore spatial ...
Journal Article
Congestion at airports: the economics of airport expansions
Congestion and subsequent delays have been prevalent in many U.S. airports in recent years. A common response to congestion, championed by many community leaders, is to expand capacity by constructing new runways and terminals. Airport expansions are costly, complex, and controversial. We begin by using basic economic theory to analyze congestion at those airports that are part of an air transportation system. Next, we describe how benefit-cost analysis is used to assess the desirability of airport expansions. Many of the key points are illustrated in the context of Lambert?St. Louis ...
Working Paper
Local Polynomial Regressions versus OLS for Generating Location Value Estimates: Which is More Efficient in Out-of-Sample Forecasts?
As an alternative to ordinary least squares (OLS), we estimate location values for single family houses using a standard housing price and characteristics dataset by local polynomial regressions (LPR), a semi-parametric procedure. We also compare the LPR and OLS models in the Denver metropolitan area in the years 2003, 2006 and 2010 with out-of-sample forecasting. We determine that the LPR model is more efficient than OLS at predicting location values in counties with greater densities of sales. Also, LPR outperforms OLS in 2010 for all 5 counties in our dataset. Our findings suggest that LPR ...
Working Paper
Airport-related noise, proximity, and housing prices in Atlanta
Using hedonic models, we analyze the effects of noise and proximity on housing prices in neighborhoods near Hartsfield-Jackson Atlanta International Airport during 1995-2002. We address complications caused by changes over time in the levels and geographic distribution of noise and by the fact that noise levels are measured only at the beginning and after the end of the sample period. Generally speaking, housing prices were affected positively by declining noise levels. After accounting for proximity, house characteristics, and demographic variables, houses in noisier areas sold for less than ...
Journal Article
An introduction to two-rate taxation of land and buildings
When taxing real property at the local level in the United States, land and improvements to the land, such as buildings, are generally taxed at the same rate. Two-rate (or split-rate) taxation departs from this practice by taxing land at a higher rate than structures. This paper begins with an elementary discussion of taxation and the economic rationale for two-rate taxation. In theory, moving to a two-rate tax reduces the deadweight losses associated with distortionary taxation and generates additional economic activity. The paper also provides a history of two-rate taxation in the United ...
Working Paper
Spatial hedonic models of airport noise, proximity, and housing prices
Despite the refrain that housing prices are determined by "location, location, and location," no prior studies of airport noise and housing prices have incorporated spatial econometric techniques. We compare various spatial econometric models and estimation methods in a hedonic price framework to examine the impact of noise on 2003 housing values near the Atlanta airport. Spatial effects are best captured by a model including both spatial autocorrelation and autoregressive parameters estimated by a generalized moments approach. The inclusion of spatial effects magnifies the negative price ...
Journal Article
1960s Interstate Highways and Homeowner Wealth Distribution
This article studies house-level real estate wealth distribution changes nearby a major interstate highway, comparing values before the announcement of the highway's construction (1940) with those during and shortly after the construction period (1961-74). We also develop Lorenz curves to examine the distribution of housing wealth among various demographic groups of homeowners. First, we find that properties at least a half-mile away from I-84 experienced statistically significant appreciation (on average). Houses further away, in 0.25 mile increments up to 1.25 miles, appreciated less. Our ...