centre for microdata methods and practice

ESRC centre

cemmap is an ESRC research centre

ESRC

Keep in touch

Subscribe to cemmap news

Nonparametric estimation of nonadditive hedonic models

Authors: James Heckman , Rosa Matzkin and Lars Nesheim
Date: 30 September 2010
Type: Journal Article, Econometrica, Vol. 78, No. 5, pp. 1569--1591

Abstract

We analyze equilibria in hedonic economies and study conditions that lead to identification of structural preference parameters in hedonic economies with both additive and nonadditive marginal utility and marginal product functions. The latter class is more general, allows for heterogeneity in the curvature of consumer utility, and can result in conditions that lead to bunching. Such bunching has been largely ignored in the previous literature. We then present methods to estimate marginal utility and marginal product functions that are nonadditive in the unobservable random terms, using observations from a single hedonic equilibrium market. These methods are important when statistical tests reject additive specifications or when prior information suggests that consumer or firm heterogeneity in the curvature of utility or production functions is likely to be significant. We provide conditions under which these types of utility and production functions are nonparametrically identified, and we propose nonparametric estimators for them. The estimators are shown to be consistent and asymptotically normal. When the assumptions required to use single market methods are unjustified, we show how multimarket data can be used to estimate the structural functions.

Previous version:
James Heckman, Rosa Matzkin and Lars Nesheim March 2005, Nonparametric estimation of nonadditive hedonic models, cemmap Working Paper, CWP03/05

Publications feeds

Subscribe to cemmap working papers via RSS

Search cemmap

Search by title, topic or name.

Contact cemmap

Centre for Microdata Methods and Practice

How to find us

Tel: +44 (0)20 7291 4800

E-mail us