Neighborhood Choice Research Articles

Non-Linear Choice Modelling with Gaussian Processes: A Case Study of Neighbourhood Choice in Stockholm

We present a non-parametric extension of the conditional logit model, using Gaussian pro- cess priors. The conditional logit model is used in quantitative social science for inferring interaction e ...

How White Parents of Black and Multiracial Transracially Adopted Children Approach Racial Exposure and Neighborhood Choice

Although past research on racial socialization tends to concentrate on providing cultural knowledge and pride, this paper focuses on exposure to environments as a means of understanding preparation for racial discrimination, specifically in regard to transracial adoption. This article looks at how 19 white adoptive parents of black and multiracial adopted children perceive their neighborhood choice and decisions of where to send their kids to school and whom to befriend in order to understand how they approach racial socialization. Analysis of data from in-depth interviews illustrates how those who adopted transracially both domestically and internationally stressed that they did not want their children to be in environments where they would be the only person of color because they were concerned about their child experiencing racism and feeling isolated. Even so, they tended to live in white neighborhoods and send their children to predominantly white schools. Parents expressed being conflicted by what they saw as opposing measures and perceptions of school quality and racial-ethnic diversity. The parents in this study said that they sought out social support through organizations and friendships to expand their social networks for themselves and their children. Findings are not meant to challenge or support transracial adoption but rather to gain insight into perceptions of racial diversity, neighborhood and school choices, and friendship networks as a way to understand aspects of racial socialization associated with environmental exposure and preparation for racism.

Comparing text-only and virtual reality discrete choice experiments of neighbourhood choice

Stated Preference (SP) surveys are used in many disciplines including: marketing; transportation-, environmental- and health-economics; and landscape and urban planning. The Landscape Preference Study (LPS) is a common SP technique in landscape and urban planning, defined by the presentation of landscapes through images, something uncontroversial in this literature. The use of visual attributes in SP surveys in the marketing and economics literatures has, however, aroused controversy. Potential benefits are evoked (greater realism in tasks), but drawbacks (e.g. unintended information affecting respondent choices) are also discussed. At the same time, the use of visualization and simulation is said to be “outstripping” understanding of how best to use them in planning contexts. We adopt “the economic approach” to LPSs (the Discrete Choice Experiment) to better understand how presentational methods affect results in the context of neighborhood choice. We compare two experiments; one administered as a virtual reality simulation, and the other as a text-only survey. We conclude that in essence, respondent preferences in the text-only survey were based on respondent mental images of building types, whereas in the visual survey, preferences were based on the displayed images. As such, we propose that LPS visuals are best employed when the visual representations provided to respondents are accurate descriptions of possible outcomes, as they could be in public consultations related to landscape and urban planning. In so doing we make one step toward Lovett et al.’s (2015) call to help evaluate the increasing number of options available in landscape visualization.

Structural Demand Estimation With Borrowing Constraints

Structural models of location choice use observed demand to estimate household preferences. However, household demand may be partly determined by borrowing constraints, limiting households’ choice set. Credit availability differs across locations, households, and years. We put forward a model of neighborhood choice where mortgage approval rates determine households’ choice set. Using household-level data, geocoded transactions, and mortgage applications for the San Francisco Bay area, we find that including borrowing constraints leads to higher estimated preferences for better performing schools and majority-white neighborhoods. General equilibrium estimates of the relaxation of lending standards provide two out-of-sample predictions: between 2000 and 2006, (i) a compression of the price distribution and (ii) a decline in black exposure to Whites. Both predictions are supported by empirical observation.

A Dynamic Model of Demand for Houses and Neighborhoods

This paper develops a dynamic model of neighborhood choice along with a computationally light multi-step estimator. The proposed empirical framework captures observed and unobserved preference heterogeneity across households and locations in a flexible way. We estimate the model using a newly assembled data set that matches demographic information from mortgage applications to the universe of housing transactions in the San Francisco Bay Area from 1994 to 2004. The results provide the first estimates of the marginal willingness to pay for several non-marketed amenities—neighborhood air pollution, violent crime, and racial composition—in a dynamic framework. Comparing these estimates with those from a static version of the model highlights several important biases that arise when dynamic considerations are ignored.

Should I stay or should I go? Locational decisions and coping strategies of Turkish homeowners in low-income neighbourhoods

The paper analyses residential mobility and neighbourhood choice of Turkish-origin homeowners in Germany. The research focuses on the decision-making processes of the Turkish-origin second generation either to stay in low-income neighbourhoods or to leave their ‘old’ residential environment. Findings illustrate coping strategies the households develop to deal with drawbacks. The analysis is based on 30 in-depth interviews with Turkish-origin households in the city of Duisburg. Research findings indicate three different dimensions, which shape decisions: the ‘family orientation’, the ‘social positioning’ and the ‘investment strategy’ of the households. The decision either to stay or to leave is followed by several coping strategies that are exercised in order to overcome perceived disadvantages. The set of strategies ranges from bridging out of the neighbourhood to local boundary-making in social and spatial terms. These coping strategies provide important clues for understanding the residential satisfaction of both stayers and leavers.

Estimating Neighborhood Choice Models: Lessons from a Housing Assistance Experiment

We use data from a housing-assistance experiment to estimate a model of neighborhood choice. The experimental variation effectively randomizes the rents which households face and helps identify a key structural parameter. Access to two randomly selected treatment groups and a control group allows for out-of-sample validation of the model. We simulate the effects of changing the subsidy-use constraints implemented in the actual experiment. We find that restricting subsidies to even lower poverty neighborhoods would substantially reduce take-up and actually increase average exposure to poverty. Furthermore, adding restrictions based on neighborhood racial composition would not change average exposure to either race or poverty. (JEL I32, I38, R23, R38)

Neighborhood Dynamics and the Distribution of Opportunity

Wilson (1987) argued that policies ending racial discrimination would not equalize opportunity without addressing residential sorting and neighborhood externalities. This paper studies related counterfactual policies using an overlapping-generations dynamic general equilibrium model of residential sorting and intergenerational human capital accumulation. In the model, households choose where to live and how much to invest toward the production of their child's human capital. The return on parents' investment is determined in part by the child's ability and in part by an externality determined by the human capital in their neighborhood. We calibrate the model with two neighborhoods and neighborhood-specific production technologies to data from Chicago when mobility was restricted by race. We then conduct three numerical experiments by eliminating the restriction on neighborhood choice, equalizing production technologies, or both. We find that allowing residential mobility generates persistent income inequality, even when technologies are equalized across neighborhoods. Equalizing technologies only equalizes opportunity for residents in the originally segregated neighborhood when high-income households reside there. Our findings suggest that policies aimed at improving outcomes in impoverished areas should feature incentives for high-income households to stay or migrate into the neighborhood.

UNDERSTANDING THE NEIGHBOURHOOD CHOICE DECISIONS OF MOVERS: AN ANALYSIS OF FOCUS GROUP DISCUSSIONS

Using a qualitative methods approach, this study explores the key factors that influence household neighbourhood choice. Three newly developed residential neighbourhoods have been studied to examine resident decision making around their neighbourhood preferences. Four focus group (n = 4) discussions with 29 individuals who were recent movers to the study areas were conducted to examine the reasons behind neighbourhood choice and the needs of the household. The results revealed that household neighbourhood choice decisions were multi-faceted and complex. The key findings can be classified into six categories: safety, residential environment, neighbourhood facilities, accessibility, economic and demographic factors. Residents emphasised that the combination of land-use and transportation planning may be one important part of multi-layered solutions to improve quality of life in residential neighbourhoods.

Structural Demand Estimation with Borrowing Constraints

Structural models of location choice use observed demand to estimate household preferences. However, household demand may be partly determined by borrowing constraints, limiting households’ choice set. Credit availability differs across locations, households, and years. We put forward a model of neighborhood choice where mortgage approval rates determine households’ choice set. Using household-level data, geocoded transactions, and mortgage applications for the San Francisco Bay area, we find that including borrowing constraints leads to higher estimated preferences for schools and majority-white neighborhoods. General equilibrium estimates of the relaxation of lending standards provide two out-of-sample predictions: between 2000 and 2006, (i) a compression of the price distribution and (ii) a decline in black exposure to Whites. Both predictions are supported by empirical observation.

Neighborhood Self-Selection: The Role of Pre-Move Health Factors on the Built and Socioeconomic Environment.

Residential self-selection bias is a concern in studies of neighborhoods and health. This bias results from health behaviors predicting neighborhood choice. To quantify this bias, we examined associations between pre-move health factors (body mass index, walking, and total physical activity) and post-move neighborhood factors (County Sprawl Index, Census tract socioeconomic status (SES)) in the Nurses’ Health Study (n = 14,159 moves from 1986–2008). Individuals in the highest quartile of pre-move BMI (BMI > 28.4) compared to the lowest quartile (BMI < 22.5) moved to counties that averaged 2.57 points lower on the sprawl index (95% confidence interval −3.55, −1.59) indicating that individuals moved to less dense counties; however, no associations were observed for pre-move walking nor total physical activity. Individuals with higher pre-move BMI tended to move to Census tracts with lower median income and home values and higher levels of poverty. Analyses examining the change in neighborhood environments after a move demonstrated that healthy pre-move behaviors were associated with moves to worse socioeconomic environments. This type of self-selection would bias results downward, underestimating the true relationship between SES and physical activity. Generally, the magnitudes of associations between pre-move health factors and neighborhood measures were small and indicated that residential self-selection was not a major source of bias in analyses in this population.

Efficient Coordination in Weakest-Link Games

Coordination problems resembling weakest-link games with multiple Pareto ranked equilibria are ubiquitous in the economy and society. This makes it important to understand if and when agents are able to coordinate efficiently. Existing research on weakest-link games shows an overwhelming inability of people to coordinate on efficient equilibria, especially in larger groups. We show experimentally that freedom of neighbourhood choice overcomes the problem and leads to fully efficient coordination. This implies substantial welfare effects with achieved welfare being about 50% higher in games with neighbourhood choice than without it. We identify exclusion of low effort providers who in response start providing high effort as the simple but effective mechanism enforcing efficient coordination. A variety of other treatments show that the efficiency result as well as the identified mechanism are robust to changes in the information condition, payoff specification, and a substantial increase in group size. Moreover, we find that neighbourhood choice boosts efficiency even when exclusion does not materially affect the excluded agent. Our results are widely applicable on the societal and organizational level, e.g . containment of diseases, fight against terrorism, and co-authorship networks

Estimating Neighborhood Choice Models: Lessons from a Housing Assistance Experiment

We use data from a housing assistance experiment to estimate a model of neighborhood choice. The experimental variation, which effectively randomizes the rents that households face, helps us to identify a key structural parameter of the model. Access to two randomly-selected treatment groups, in addition to a control group, allows for the out-of-sample validation of the model using a group of households who were not used in estimation and who faced a separate set of incentives. We use our estimated model to simulate the effects of changing the subsidy-use constraints implemented in the actual experiment and find that restricting subsidies to even lower poverty neighborhoods substantially reduces take-up. As a result, average exposure to poverty actually increases under these more restrictive subsidies. We also simulate the effect of adding additional subsidy restrictions based on neighborhood racial composition and find that this policy does not change the average household exposure to either neighborhood racial composition or poverty.

An Exploratory Study of Neighborhood Choices Among Moving to Opportunity Participants in Baltimore, Maryland: The Influence of Housing Search Assistance

This study examined the neighborhood choices of 150 families who participated in the Moving To Opportunity Program (MTO) in Baltimore, Maryland. The MTO program, utilizing an experimental design, provided intensive housing search and counseling services to the experimental subjects. This study found that the counseling services were instrumental in altering the subject's cognitive maps, and they were more likely to move to neighborhoods that were more racially integrated, safer, and, also, had higher levels of satisfaction with their new neighborhood. The authors conclude that the MTO program in Baltimore represents a clear case of public policy that, at least in the short term, worked.

Socioeconomic and Racial Disparities in the Financial Returns to Homeownership

In this study we utilize data from over a million ownership spells between 1990 and 2013 in 9 metropolitan areas - Boston, Chicago, Detroit, Los Angeles, Miami, New York, Pittsburgh, San Diego, and San Francisco - to provide what we believe to be the most extensive analysis of the variation in the financial returns to homeownership along racial and socioeconomic dimensions. Holding constant a buyer's purchase price, property type, neighborhood, and purchase and sale timing, we find that capital gains have been systematically lower - and the real cost of ownership has been systematically higher - for low-income and minority home buyers in every market in our sample.When conditioning on a buyer's racial characteristics or socioeconomic status alone, however, we find evidence of significant heterogeneity in the relationship between race, income, and the returns to homeownership across markets. Results from a regression decomposition exercise reveal that minority and low-income households generally purchased homes in neighborhoods with below-average price growth. In several markets, however, the negative impact of neighborhood choice for these buyers was more than offset by superior purchase-sale timing and a higher propensity to purchase low-valued homes that exhibited above-average appreciation.Taken as whole, our findings suggest that the manner in which homeownership affects wealth inequality has varied significantly both across space and over time. We find no support for the claim that encouraging homeownership for low-income and minority households is a panacea for addressing wealth inequality.

Transportation Access, Rental Vouchers, and Neighborhood Satisfaction: Evidence From the Moving to Opportunity Experiment

The Housing Choice Voucher (HCV) program is designed in part to expand the neighborhood choices of assisted households, thereby enabling assisted households to find a living environment that simultaneously meets their housing and neighborhood preferences. While several studies have examined the impact of rental subsidies on neighborhood satisfaction, few have examined whether access to adequate transportation enables HCV recipients to locate housing in more desirable locations. This article relies on data from the Moving to Opportunity experiment to examine the impact of transportation access, rental housing vouchers, and geographic constraints on neighborhood satisfaction. We find that access to both vehicles and public transit positively influences neighborhood satisfaction, and the influence of vehicle access varies with transit proximity. These findings point to the importance of transportation in helping low-income assisted renter households locate housing in more desirable neighborhoods.

Seeking politically compatible neighbors? The role of neighborhood partisan composition in residential sorting

High rates of internal migration throughout the United States offer opportunities to examine the factors underlying residential selection and neighborhood choice. We devise a survey experiment where respondents are shown photographs of properties and information about the local socioeconomic environment. By providing and varying additional information about the neighborhood partisan composition, our survey experiment explores how political information affects property evaluation. We find that the same property will be evaluated more favorably by partisans when they learn that it is situated in a predominantly co-partisan neighborhood. A second experiment examines how people make judgments about neighborhood partisan composition in the absence of readily available information. We learn that correct inferences about the politics of a locale can be drawn from non-political information about it, even without exposure to direct information about its partisan balance.

Behavioral Economics and Public Policy: A Pragmatic Perspective

The debate about behavioral economics–the incorporation of insights from psychology into economics–is often framed as a question about the foundational assumptions of economic models. This paper presents a more pragmatic perspective on behavioral economics that focuses on its value for improving empirical predictions and policy decisions. I discuss three ways in which behavioral economics can contribute to public policy: by offering new policy tools, improving predictions about the effects of existing policies, and generating new welfare implications. I illustrate these contributions using applications to retirement savings, labor supply, and neighborhood choice. Behavioral models provide new tools to change behaviors such as savings rates and new counterfactuals to estimate the effects of policies such as income taxation. Behavioral models also provide new prescriptions for optimal policy that can be characterized in a non-paternalistic manner using methods analogous to those in neoclassical models. Model uncertainty does not justify using the neoclassical model; instead, it can provide a new rationale for using behavioral nudges. I conclude that incorporating behavioral features to the extent they help answer core economic questions may be more productive than viewing behavioral economics as a separate subfield that challenges the assumptions of neoclassical models.

Selective mobility, segregation and neighbourhood effects

Selective mobility, segregation and neighbourhood effects

Selective mobility, segregation and neighbourhood effects

Selective mobility, segregation and neighbourhood effects