Housing Demand, Commuting Patterns, and Land Use Responses to Public Investments

This dissertation investigates people’s responses when access to or the level of local public goods is proposed to or actually changes. By understanding how people respond to potential changes in school assignment, construction of the interstate highway system, and the widening of existing highways, researchers can gain better insight into how to accurately estimate people’s valuation of local public goods and policy makers can pursue effective policies to relieve traffic congestion and mitigate the impact of new highway construction. The first essay examines if information regarding potential school reassignment causes cross-sectional capitalization estimation techniques, most notably the border method, to undervalue people willingness to pay for school quality. Using hedonic regression techniques and home sale data from DeKalb County, Georgia, I find that residents’ expectations of future school quality are important factors in determining the magnitude of school quality capitalization estimates. The second essay explores how the construction of the interstate highway system impacted agricultural land loss in Georgia. Since agricultural land provides many positive externalities while its loss leads to several negative externalities, the results inform policy makers seeking to preserve agricultural land and study the urban form. Using a historical dataset covering 1945 to 2007, I find that each additional highway mile constructed led to the conversion of 468 acres of agricultural land. Finally, the third essay investigates commuter responses to the widening of existing highways in order to evaluate the effectiveness of road construction as a traffic congestion relief measure. The results indicate that the elasticity for the demand of driving with respect to the road supply is 0.522 and that it grows over time. Taken together, the result for the estimated elasticity imply that road construction may provide some congestion relief in the short run but eventually the expanded roads will be just as congested as before. The results of the three essays suggest that researchers and policy makers should take into the consideration how people will respond to potential changes to public goods as well as the short and long term impacts on investments in public goods