MULTICOLLINEARITY IN REGRESSION MODELS WITH MULTIPLE DISTANCE MEASURES*

ABSTRACT. In a polycentric urban context, several urban nodes may exert an influence over land rents. Where this is the case, regression analysis to explain land rents should employ distance variables corresponding to each of the urban nodes. However, these distance measures may be highly intercorrelated, thereby posing a problem of “spatial multicollinearity.” This paper demonstrates that problems arising from spatial multicollinearity can be avoided or substantially lessened by carefully selecting the geographic domain from which observations are drawn.     

THE SOCIAL BENEFITS OF URBAN CULTURAL AMENITIES*

ABSTRACT. This paper uses a two-stage hedonic wage approach to derive the benefits from improvement of five cultural amenities. It is argued that the hedonic approach permits valuation of both private and local public aspects of cultural goods since access to the amenity is an essential input in the production of the final service flow. Empirical estimates of willingness to pay suggest price and income elasticities are approximately unity. Lower-bound estimates of marginal benefits for a representative city range from $0.85 million for an additional theater to $57.9 million for an additional zoo facility.