HEDONIC PRICES, IDENTIFICATION, AND THE DEMAND FOR PUBLIC SAFETY*

Abstract

ABSTRACT In this paper, we use a two‐stage intercity hedonic model to estimate household demand for public safety. This approach is shown to readily address the identification problem inherent in the hedonic model. Data from the 1980 Public Use Microdata Sample are used to estimate a willingness‐to‐pay function for the public‐safety good. Income is found to be the primary determinant of willingness to pay. Indeed, the influence of income outweighs the combined impact of family life‐cycle considerations.