From noss1233 at gmail.com Wed Aug 22 06:59:43 2007 From: noss1233 at gmail.com (Tommy Lee) Date: Wed Aug 22 06:59:53 2007 Subject: [Wcurve-devel] NUMBER ONE Success System Message-ID: http://www.noss123.com/ The price of housing is also an important factor. The price elasticity of the demand for housing services in North America is estimated as negative 0.7 by Polinsky and Ellwood (1979), and as negative 0.9 by Maisel, Burnham, and Austin (1971). An individual household's housing demand can be modeled with standard utility/choice theory. A utility function, such as U=U(X1,X2,X3,X4,...Xn), can be constructed in which the households utility is a function of various goods and services (Xs). This will be subject to a budget constraint such as P1X1+P2X2+...PnXn=Y, where Y is the households available income and the Ps are the prices for the various goods and services. The equality indicates that the money spent on all the goods and services must be equal to the available income. Because this is unrealistic, the model must be adjusted to allow for borrowing and/or saving. A measure of wealth, lifetime income, or permanent income is required. The model must also be adjusted to account for the heterogeneousness of real estate. This can be done by deconstructing the utility function. If housing services (X4) is separated into the components that comprise it (Z1,Z2,Z3,Z4,...Zn), then the utility function can be rewritten as U=U(X1,X2,X3,(Z1,Z2,Z3,Z4,...Zn)...Xn) By varying the price of housing services (X4) and solving for points of optimal utility, that household's demand schedule for housing services can be constructed. Market demand is calculated by summing all individual household demands. -------------- next part -------------- An HTML attachment was scrubbed... URL: http://bioinformatics.org/pipermail/wcurve-devel/attachments/20070822/343abc13/attachment.html