[Excerpt] In the Spring 1979 issue of this Journal, Mario J. Rizzo (8) presented an interesting quantitative analysis of the value placed by households on avoiding crime. He used a technique currently popular among researchers for estimating the value of a whole array of impacts which impinge upon property values. This note does not quarrel with the legitimacy of using such a technique for capturing household marginal willingness to pay for crime avoidance. Instead, it focuses on two questions about how Rizzo used the technique. First, should income be used, even as a proxy for other variables, in estimating an essentially reduced form equation which relates housing characteristics (quantity measurements) to their implicit prices? Second, if a liberal estimate of the value of crime avoidance is generated, why not a conservative one also?
Carroll, W. J. (1981). The effect of crime on residential rents and property values: A comment [Electronic version]. The American Economist, 25(1), 76-77. Retrieved [insert date], from Cornell University, School of Hospitality Administration site: http://scholarship.sha.cornell.edu/articles/78/