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A Research On Inference From Multiple Distance Variables In Hedonic Regression – Focus On Three Variables

Authors: Yan Wang; Yasushi Asami; Yukio Sadahiro;

A Research On Inference From Multiple Distance Variables In Hedonic Regression – Focus On Three Variables

Abstract

{"references": ["Lancaster, K. J. \"A new approach to consumer theory\", Journal of\nPolitical Economy 74, 1966, pp.132\u201357.", "Sherwin Rosen, \"Hedonic Prices and Implicit Markets: Product\nDifferentiation in Pure Competition\", Journal of Political Economy, Vol.\n82, No. 1, Jan. - Feb., 1974, pp. 34-55", "Silvey, F. \"Multicollinearity and Imprecise Estimation\", Journal of the\nRoyal Statistical Society, Series B, 35, 1985, pp.99-115", "Coo, R. D. \"Detection of influential observation in linear regression\",\nTechnometrics,19, 1977, pp.15-18", "Herl, Arthur E. and Robert W. Kennard. \"Ridge Regression: Biased\nEstimation of Nonorthogonal Problems\", Technometrics, 12, 1970a. pp.\n55-67.", "Hoaglin, D. C., and Welsch, R. E. \"The hat matrix in regression and\nANOVA\", Amer. Statistician, 1978, 3217-22.", "Neter, J, Kun Neter, J., Kutner, M. H., Nachtshein, C. J.,Wasserman,W.,\n\"Applied Linear Regression Models\",3rd ed. Homewood III, Irwin. 1996.", "Danel A. Griffiths, \"Modeling Urban Population Density in a\nMulti-centered City.\" Journal of Urban Economics 9, 1981. pp.298-310.", "Eric Heikkila, \"Mullticollinearity in Regression Models with Multiple\nDistance Measures\", Journal of Regional Science, vol.28. No.3, 1998.\n[10] M. Tiefelsdorf, \"Misspecifications in interaction model distance\ndecayrelations: A spatial structure effect\" J. Geograph Syst, 2003, 5:\npp25-50\n[11] Jaewoo Lee, Keemin Sohn, \"Identifying the Impact on Land Prices of\nReplacing At-grade or Elevated Railways with Underground Subways in\nthe Seoul Metropolitan Area\", Urban Studies Journal Limited, 2013,\nDOI:10.1177/0042098013484543\n[12] Heather A Sander, Debarchana Ghosh, David van Riper, Steven M\nManson, \"How do you measure distance in spatial models? An example\nusing open-space valuation\", Environment and Planning B: Planning\nand Design, volume 37, 2010, pp.874 \u2013 894.\n[13] Justin M. Ross, Michael C. Farmer, Clifford A. Lipscomb, \"Inconsistency\nin Welfare Inferences from Distance Variables in Hedonic Regressions\",\nJournal of Real Estate Finance and Economics, 43, 2011, pp.385-400.\n[14] Hao Huang, Li Yin, \"Creating sustainable urban built environments: An\napplication of hedonic house price models in Wuhan, China\", Springer\nScience + Business Media Dordrecht, 2014 J, House and the Built\nEnviron DOI 10.1007/s 10901-014-9403-8, Urban Geography, Vol. 35,\nNo.3, 2014, pp. 420-439\n[15] D. Schmeidler, \"The nucleolus of a characteristic function game\", SIAM\nJournal of Applied Mathematics, 17, 1969, pp. 1163\u20131170"]}

In urban context, urban nodes such as amenity or hazard will certainly affect house price, while classic hedonic analysis will employ distance variables measured from each urban nodes. However, effects from distances to facilities on house prices generally do not represent the true price of the property. Distance variables measured on the same surface are suffering a problem called multicollinearity, which is usually presented as magnitude variance and mean value in regression, errors caused by instability. In this paper, we provided a theoretical framework to identify and gather the data with less bias, and also provided specific sampling method on locating the sample region to avoid the spatial multicollinerity problem in three distance variable’s case.

Keywords

collinearity., Hedonic regression, multicollinerity, urban node, distance variables

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