Housing Upkeep and Public Good Provision in Residential Neighborhoods

Abstract

Neighborhood condition is a public good in part provided by neighborhood residents’ private property maintenance. Considering neighborhood condition as an impure public good provides a theoretical basis for understanding how the level of neighborhood quality may affect residents’ home maintenance decisions. Empirical results in a low-income neighborhood, where formulating public policy to improve neighborhoods is of significant concern, indicate a positive substitution effect. When neighborhoods improve, residents respond by increasing exterior home upkeep. This result is robust to both changes in the neighborhood condition generated by other neighbors’ increase in maintenance and exogenous public investment in the neighborhood.

Keywords:

• Public goods
• neighborhoods
• joint products

JEL Classifications:

• H41
• R23
• D12

Acknowledgments

This study was funded by the National Science Foundation (NSF/SES-0827350).

Notes

1. The results are easily transferable to the n-household community.

2. There is little reason to believe that should be large enough to influence the results that follow. Full results that account for a non-zero value for are available from the author upon request.

3. The original factors scores were rescaled according to the following formula: rescaled factor = 4 - original factor.