The value of culture to urban housing markets

ABSTRACT

Cultural amenities are the expression of a cultural environment, given by a combination of aesthetic factors, styles, rhythms and behaviours, which contribute to make a neighbourhood vibrant and more enjoyable. Following the hedonic approach, we propose an empirical strategy to capture the multiple effects of cultural amenities, as well as the effects produced by green areas, public transport and university proximity. The results are used to determine whether cultural amenities are optimally provided by the municipality of Milan, Italy. It emerged that investments in culture generate positive effects to society, and that governments should devote far more resources to culture.

KEYWORDS:

• culture
• city
• hedonic approach
• multilevel models

JEL:

• R11
• R12
• R23

ACKNOWLEDGEMENTS

The authors are grateful to the Real Estate Observatory for providing housing market data. They thank Stefano Barberis and Sherony Warnakulasuriya for excellent research assistance; and Denise Kilmartin for editing the paper. The views expressed here are the authors’ own and do not necessarily correspond to those of the European Commission. The usual disclaimer applies.

DISCLOSURE STATEMENT

The views expressed are the authors' and do not necessarily correspond to those of the European Commission.

Notes

1. Montalto et al.'s first edition of The Cultural and Creative Cities Monitor shows how well 168 selected cities in 30 European countries perform on a range of three measures describing the cultural and creativity resources of a city. The scores of these three measures are then aggregated into an overall index.

2. Source: openbilanci.it (accessed on January 15, 2017).

3. From the terminological point of view, Glaeser et al. (2001) include culture among the consumption amenities, while Falck et al. (2018) refers to culture as a consumptive amenity.

4. For a dissertation about the value of culture, see Throsby (2001) and Bakhshi and Throsby (2010), and passim.

5. See http://www.agenziaentrate.gov.it/wps/content/nsilib/nsi/documentazione/omi (accessed on March 31, 2016.

6. For more details about the monitoring price campaign, see the manual (in Italian) at http://www.agenziaentrate.gov.it/wps/file/Nsilib/Nsi/Documentazione/omi/Manuali+e+guide/Il+manuale+della+banca+dati+OMI/Manuale_OMI_luglio2009_rev_logo.pdf.

7. Source: dati.comune.milano.it (accessed March 31, 2016).

8. To avoid cumbersome notation, in what follows we drop the subscript indicating neighborhood, n. We also do this below when the context alone suffices to identify the data hierarchy.

9. The seven universities are: Bocconi University; Catholic University of the Sacred Heart; International University of Languages and Media; Milan-Bicocca University; Polytechnic of Milan; San Raffaele University; and University of Milan. The four academies are: Brera Fine Arts Academy; European Design Institute; New Fine Arts Academy; and SAE Institute Milan.

10. Hedonic prices for housing-specific characteristics are available from the authors upon request.

11. The complete estimation results for each specification are available from the authors upon request.

12. For the municipality balance sheet and relative income and expenditure items, see http://www.openbilanci.it (accessed March 31, 2016).

Additional information

Funding

Financial support by the Italian Ministry of University and Research is gratefully acknowledged.