Japanese Regional Amenity Evaluation Considering Spatial Effects with Simultaneous Spatial Autoregressive Models

Abstract

Empirical analyses on urban/regional amenity began in the 1980s. These economic researches measured the “quality of life index” (QOLI) of cities and regions. The endogenous variables, rent, wage and population, were explained by social and economical attributes as well as some amenity attributes of regions. Simultaneous equation models were estimated and regional levels of amenity were evaluated from the estimated coefficients.In the literature regarding amenity evaluation, interregional spatial interactions and interregional spatial effects have not been sufficiently considered, however. With progress of the motorization, and expansion of the high-speed public transportation network, interregional commuting and consumer activity between areas became common. Existing researches on the measurement of regional amenities are insufficient from this viewpoint. We will be able to evaluate the regional quality of life more precisely if we employ a model in which spatial influences between regions are considered. One of the techniques for modeling such influences is spatial autoregressive models. The technology has been well established in recent decades.There has been some research regarding amenity evaluation which considers interregional spatial influences using a simplified single equation model. We cannot ignore interdependencies between endogenous variables, however. We think that a simultaneous equation system should be adopted.In this paper, we formulate econometric analyses using simultaneous spatial autoregressive models. We combine simultaneous equation systems for the endogenous variables, and consider spatial influences using a spatial autoregressive model. In this research, we use data regarding cities and regions in Japan. The amenity variables, which we evaluate, concern living, education, safety, industrial accumulation, air pollution, and natural conditions.