MEASURING THE UTILITY OF HOUSING: DEMONSTRATING A METHODOLOGICAL APPROACH

The use of magnitude estimation in identifying utility functions of housing is explored. Magnitude estimation involves measuring the subjective, or perceived, magnitude of 'real' variables. This approach is demonstrated via the variables which a group of white Mc Coll students would take into account in choosing where to live (N=23 S's aged 18-27). S's were asked to assume that a standard housing situation consisting of 2 persons in a 2-bedroom apartment, costing $80 per month per person, in good condition & located 1 mile from the campus, was to be rated 100 on an arbitrary scale of desirability. Then they were asked to estimate the overall desirability of each of 25 hyp'al situations in which all 5 variables were allowed to vary independently. The values of the regression coefficients obtained suggest that type & quality of housing are of primary importance to the students, followed fairly closely by space & price. Location emerged as a negligible factor in these evaluations, & commuting costs, either in time or money, were not regarded as very important by the R's. A regression using the logarithms of all variables was then performed. Type, space, price, & quality emerged all as about equally important, with location rather more important than was indicated by the linear regression, but still relatively much less signif than the other variables. Non-linear regression is considered preferable for various reasons, eg, it explains almost 33% of the linear equation's unexplained variance. The method of magnitude estimation should be tested further & more studies are needed in order to describe utility functions for all important groups in the society. 1 Table, 4 Figures. M. Maxfield.