Objective Housing Sales and Rent Prices in Representative Household Surveys: Implications for Wealth, Inequality, Housing Market and Affordability Statistics

Many economic analyses require hypothetical but realistic sales and rent prices for properties representative for the housing stock and reflecting current market conditions. To achieve this, we replace subjectively reported prices in a representative household survey in Luxembourg by objectified hedonic imputations informed by observable market data. Thus, we propose a powerful tool for assessing the health and affordability of housing markets, compiling housing-related statistics and simulating hypothetical scenarios. This approach also enables us to test for the reliability of survey responses. When switching to objectified values, we detect shifts in the wealth distribution, large regional variation in market indicators and striking affordability concerns: only 18% of Luxembourg’s renters could theoretically afford purchasing their inhabited dwelling given current market conditions. Further, participants’ tendency to mis-estimate market values strongly correlates with tenure length and type, dwelling type, income and wealth.FNR Luxembourg National Research Fund, CORE Grant No. 3886 (ASSESS

OBJECTIVE HOUSING SALES AND RENT PRICES IN REPRESENTATIVE HOUSEHOLD SURVEYS: IMPLICATIONS FOR WEALTH, INEQUALITY, HOUSING MARKET, AND AFFORDABILITY STATISTICS

Publication status: PublishedMany economic analyses require hypothetical but realistic sales and rent prices for properties representative of the housing stock and reflecting current market conditions. To achieve this, we replace subjectively reported prices in a representative household survey in Luxembourg with objectified hedonic imputations informed by observable market data. Thus, we propose a powerful tool for assessing the health and affordability of housing markets, compiling housing‐related statistics and simulating hypothetical scenarios. This approach also enables us to test for the reliability of survey responses. When switching to objectified values, we detect shifts in the wealth distribution, large regional variation in market indicators, and striking affordability concerns: only 18 percent of Luxembourg's renters could theoretically afford to purchase their inhabited dwellings given current market conditions. Further, participants' tendency to mis‐estimate market values strongly correlates with tenure length and type, dwelling type, income, and wealth.FNR Luxembourg National Research Fund, CORE Grant No. 3886 (ASSESS

Hidden costs of control: four repetitions and an extension

We report four repetitions of Falk and Kosfeld’s (Am. Econ. Rev. 96(5):1611–1630, 2006) low and medium control treatments with 476 subjects. Each repetition employs a sample drawn from a standard subject pool of students and demographics vary across samples. We largely confirm the existence of hidden costs of control but, contrary to the original study, hidden costs of control are usually not substantial enough to significantly undermine the effectiveness of economic incentives. Our subjects were asked, at the end of the experimental session, to complete a questionnaire in which they had to state their work motivation in hypothetical scenarios. Our questionnaires are identical to the ones administered in Falk and Kosfeld’s (Am. Econ. Rev. 96(5):1611–1630, 2006) questionnaire study. In contrast to the game play data, our questionnaire data are similar to those of the original questionnaire study. In an attempt to solve this puzzle, we report an extension with 228 subjects where performance-contingent earnings are absent i.e. both principals and agents are paid according to a flat participation fee. We observe that hidden costs significantly outweigh benefits of control under hypothetical incentives.publishe