Abstract

Eliciting willingness to pay (WTP) for city amenities is not an easy task due to both endogeneity problems and unobserved heterogeneity in individuals' preferences. We address these two issues by using a city choice experiment to infer monetary values (WTP) associated with relocation attributes of a hypothetical job offer. Adopting a latent class logit approach (LCL) allows us to explore underlying unobserved preference heterogeneity. Benchmark results - without accounting for heterogeneity - suggest that commuting time, crime, and access to entertainment are very important. However, our LCL estimates support that focusing just on average WTP obscures the fact that preferences for amenities vary across individuals.