Evaluating the Accuracy of Homeowner Self-Assessed Rents in Peru
Attributing a rental value to the dwellings of homeowners is essential in various contexts, including distributional analysis and the compilation of national accounts, consumer price indexes (CPIs), and purchasing power parity indexes. One of the m...
| Main Authors: | , , |
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| Format: | Working Paper |
| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/287901565890099664/Evaluating-the-Accuracy-of-Homeowner-Self-Assessed-Rents-in-Peru http://hdl.handle.net/10986/34370 |
| Summary: | Attributing a rental value to the
dwellings of homeowners is essential in various contexts,
including distributional analysis and the compilation of
national accounts, consumer price indexes (CPIs), and
purchasing power parity indexes. One of the methods for
making the attribution is to use homeowner estimates of the
market rental value they would pay (receive) for their
dwellings if these were rented. This is known as homeowner
self-assessed rent. However, homeowner estimates may not be
accurate because of the way questions aimed at soliciting
such information are phrased, the sentimental attachment of
the homeowners to the properties, lack of information about
rental markets, and other reasons. Yet, researchers and
practitioners often neglect to ascertain the accuracy of
homeowner assessments. This study argues that comparing
unconditional or conditional means may be misleading if one
has not ascertained whether the observable characteristics
of homeowner and tenant dwellings are similar. Using
Peruvian data from 2003 to 2017, the study tests the
accuracy of self-assessed rental values with matching
estimators. In Metropolitan Lima, homeowners typically
provide accurate estimates of the rental market values of
their dwellings. In rural areas, market rental values are
underestimated by homeowners in more instances. The
direction and magnitude of the inaccuracies in Metropolitan
Lima and in rural areas are comparable and range between −25
percent and −20 percent. |
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