by: Dr. John Carruthers
My presentation is an overview of a book that I will be publishing in Springer’s new series on Regional Development in Asia.
This book presents the results of an extensive revealed preference analysis of the economic value of urban amenities — including various forms of green space, school quality, and more — in the Seoul metropolitan area, South Korea. It specifically develops a two-stage hedonic price analysis of the housing market in order to: (i) determine what types neighborhood amenities mater in the Korean context, and how; and (ii) estimate the value of, and demand for, education quality and the role of “bio-philia” in the Seoul space-economy. It also estimates the consumer surplus of various policies aimed at quality of life improvements. Along the way, the project explores the importance of amenities specific to the Korean context and the explains the psychology of quality of life in Korean culture. The analysis itself — which engages more than 148 trillion KRW, or about 129 billion USD, in housing transactions — reveals, among other things, that both naturally-occuring and human-made amenities exert considerable force within the region’s real estate market. A particularly interesting finding is that, all else being equal, residents of Seoul’s prestigious Gangnam district pay an estimated premium of 278,000,000 KRW (241,740 USD) for the privilege of living there. This general finding is a measure of a cultural zeitgeist that has recently swept the globe – and a manifestation of Seoul’s established primacy as a world city. The book serves as both a handbook on two-stage hedonic price analysis and as a deep case study of quality of life policy in an advanced Asian economy. The work concludes by drawing generalizable lessons for real estate markets in other Asian regions.