Hedonic Pricing Method: Housing and Environmental Goods

This lecture introduces the Hedonic Pricing Method (HPM) for assessing the implicit prices of attributes in heterogeneous goods like single-family houses. It explains how the price of a good reflects the value of its characteristics and how the HPM helps identify these attributes. The instructor illustrates examples of pricing single-family houses based on volume, age, and land surface. The lecture also covers the hedonic assessment of risk in wages, estimating the value of statistical life. Limitations of the HPM are discussed, including data quality issues and model specifications. The Contingent Valuation Method (CVM) is presented as a tool to estimate the value of environmental goods, discussing WTP and WTA concepts and the challenges of designing truthful contingent scenarios.