In August 2017, Jeroen van Haaren presented the (working) paper ‘Enjoy your meal: Restaurants and House Prices in Amsterdam’ at the 57th annual ERSA (European Regional Science Association) conference in Groningen. The paper is joint work with Frank van Oort and Anna Wildeboer, it shows that restaurants as indicators of the attractive city are capitalized into house prices.
The capitalization mechanisms are based on availability, diversity and quality. The paper shows that home owners value local environments with a diverse set of medium tier quality restaurants most. In essence, a wide selection of affordable restaurants close to your home, adds most value to the living environment.
The paper further adds to the debate on ‘endogenous urban amenities’ by evaluating the question of causality using an instrumental variables approach. In other words, it addresses the question whether restaurants sort into neighborhoods based on the (income and) house prices in neighborhoods, or whether the restaurant offer adds value to the neighborhood, thus increasing house prices. From a policy perspective this is highly relevant, as it answers the question whether fostering the restaurant sector increase the attractiveness of neighborhoods, or conversely just leads to an oversupply of restaurants, which may even be detrimental to attractiveness. The article shows that the former is the case: a diverse set of affordable, medium quality restaurants leads to the highest willingness to pay.
More information: Jeroen van Haaren (email@example.com) or +31 10 408 2429)