Public services satisfaction and single‐family house prices in the USA

Abstract

PurposeThe purpose of this paper is to empirically test whether residents' satisfaction with seven general purpose public services are capitalized in single‐family house prices. The public services investigated are: fire protection, paramedic services, police protection, trash removal, snow removal, street maintenance, and neighborhood parks.Design/methodology/approachThe seven service satisfaction measures, derived from a public opinion survey, are grouped into three variables based on the city department responsible for providing the service and included in a hedonic regression of single‐family house transactions that occurred in Dayton, Ohio.FindingsAll three satisfaction variables are positively related to house price, providing evidence that intra‐jurisdictional differences in the nature of public services are capitalized through market processes.Social implicationsThe strength of the satisfaction measures in the regression model suggests that efforts to improve citizen satisfaction may be an important component of local efforts to stabilize urban neighborhoods and improve property values.Originality/valueThe present study is the first to use transaction prices rather than assessed values to analysis multiple general public services simultaneously. Because almost all previous studies investigate multiple jurisdictions the present study is also fairly unique as it focuses on different locations within a single jurisdiction. The use of survey responses regarding resident satisfaction with public services represents an advance on previous measures of public service provision because it potentially reflects underlying motivations of buyers and sellers very directly.