Indeed, thanks a lot to all of you for your overwhelming re
Dear all,
Indeed, thanks a lot to all of you for your overwhelming response to my earlier question both in terms of offering your comments as well as suggesting references—all of which has been very useful. Just for the benefit of others, following two of the suggested references were particularly useful as a decent starting point: [1] a recent UK National Statistics release on Family spending (http://www.statistics.gov.uk/downloads/theme_social/Family_Spending_2006-07/FamilySpending2007_web.pdf) and [2] a US report by Centre of Housing Policy (see http://www.nhc.org/pdf/pub_heavy_load_10_06.pdf). However, in the future if any of you come across similar studies/reports in developing countries then please let me know.
Based on the overwhelming response, I am tempted to ask one more question:
Background
In my model, I start with an assumed value of income elasticity of demand for housing (IEDH) and then derive sq m/dwelling (keeping SEG4 fixed and varying SEG1-3), to achieve a constant IEDH set initially. (The staring value is based on ranges observed by Emrisch et al (1996), Wilkinson (1973), and Hansen et al (1996) and other work cited by them). Using the observed average price of dwelling/sq m (including land cost) for my case study city of Ahmedabad, house prices and ultimately rents are derived. These rents as % of income are compared with the observed values (the question in my first email). If the difference is significant then a new value of IEDH is used and the sub-model is run iteratively till the difference between modelled and observed values is insignificant. The next step then is to use the sq m/dwelling obtained above to construct a demand schedule (curve) for each SEG, by iteratively adjusting demand (in sq m/dwelling) to match the
price elasticity of demand for housing (PEDH)—an assumed value. To factor for the presumed fact that in general SEG1 are less sensitive to price changes than SEG4 are, I start with PEDH for SEG4 and step it up for SEG3 to 1 (so eg, SEG4 to 1 range could be -0.30 to -0.25—this variation is an assumption! see my question below). I have come across lot of literature (eg, Ermisch et al (1996) and Wilkinson (1973) relating to UK and Hanushek & Quigley (1980) relating to the US, amongst others) that gives over all PEDH values. Therefore, I think I am in the correct ball-park with regards to an overall value (and more so as PEDH values tend to be less dispersed that IEDH (Ermisch et al, 1996)), but not sure about its variation by income groups.
The question
Have you come across studies/literature that specifically comments on how PEDH values vary across income groups? Please also feel free to offer comments based on your experience (like many of you did with the previous question).
References
Ermisch, J F, Findlay, J, & Gibb, K (1996). The price elasticity of housing demand in Britain: Issues of sample selection. Journal of Housing Economics, 5, 64-86.
Hansen, Julia L, Formby, John P, & Smith, James W (1996). The income elasticity of demand for housing: Evidence from concentration curves. Journal of Urban Economics, 39, 173-192.
Hanushek, Eric A & Quigley, John M (1980). What is the price elasticity of housing demand? The Review of Economics and Statistics, 62(3), 449-454.
Wilkinson, R K (1973). The income elasticity of demand for housing. Oxford Economic Papers, 25(3), 361-377.
This is the first time I have used these email forums for interaction and my experience has been really wonderful. Indeed the power of the Internet in such regards is unmatched!
Thanking you.
Regards,
Bhargav
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Bhargav Adhvaryu
PhD candidate in land-use and transport studies
Churchill College and Dept of Architecture
University of Cambridge
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