Natives, immigrants and social cohesion: intra-city analysis combining the hedonic approach and a framed field experiment

ABSTRACT

The literature on the hedonic price approach applied to housing highlights the existence of natives’ preferences against living in urban areas with high foreign-born population. At the same time, empirical and experimental evidence show that ethnic fragmentation reduces social cohesion in society. Mainly because of the difficulty to measure social cohesion at the neighborhood level, the correlation between these two phenomena is still largely unexplored. In this paper, we investigate natives’ preferences for immigrants following an original approach that combines the hedonic price approach and a framed field experiment. The latter allows us to collect a measure of cooperation at the neighborhood level. We apply this methodology to the city of Milan. Our findings show that natives prefer to not live in dense immigrants neighborhoods. However, this preference is not attributable to an erosion of social cohesion in those areas.

KEYWORDS:

• Cooperative behavior
• framed field experiment
• hedonic approach

JEL CODES:

• C93
• J15
• R10
• R21

Acknowledgments

We thank the Osservatorio del Mercato Immobiliare for housing market data, and the Director of Granger Press Ltd., Daniele Belleri, for data on crime. We thank Guido Anselmi, Stefano Barberis, and Domenico Corriero for excellent research assistance. The usual disclaimer applies.

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. These possible effects of voluntary associations have received great attention within the literature on social capital, with particular reference to the distinction between olson-type and putnam-type associations (see Olson 1965, 1982; Putnam, Leonardi, and Nanetti 1993; Knack and Keefer 1997) and between bridging and bonding social capital (Narayan 1999). For a definition of social capital and a taxonomy of the different dimensions that characterize the concepts, see Uphoff (1999) and Paldam (2000).

2. The other dimensions are: Common Values and a Civic Culture, Social Order and Social Control, Social Solidarity and Reductions in Wealth Disparities, Place Attachment and Identity.

3. Saiz and Wachter (2011) show in Figure 2 of their paper the causal channels that we discuss in this section.

4. It can be thought of as producing estimates from a three-step process. The first step develops instrumental variables for the endogenous variables, i.e. housing price (in log); foreign-born percentage; violent crime. The instrumental variables correspond to the predicted values resulting from the regression of each endogenous variable on all the exogenous variables. The second step provides a consistent estimate for the covariance matrix of the equation disturbances. These estimates are based on the residuals from a 2SLS estimation of each structural equation. The third step performs a GLS-type estimation using the covariance matrix estimated in the second stage and with the instrumental variables in place of the right-hand-side endogenous variables (see Davidson and MacKinnon 1993; Greene 2012; for further details).

5. Hedonic prices of housing-specific characteristics are available upon request.

Additional information

Funding

Financial support by the Italian Ministry of University and Research is gratefully acknowledged. We also thank the financial support from the Experimental Economics Lab of the University of Milan-Bicocca (EELAB) and EconomEtica, Inter-University Center for economic ethics and corporate social responsibility.