Housing Upkeep and Public Good Provision in Residential Neighborhoods

Neighborhood condition is a public good in part provided by neighborhood residents’ private property maintenance. Considering neighborhood condition as an impure public good provides a theoretical basis for understanding how the level of neighborhood quality may affect residents’ home maintenance decisions. Empirical results in a low-income neighborhood, where formulating public policy to improve neighborhoods is of significant concern, indicate a positive substitution effect. When neighborhoods improve, residents respond by increasing exterior home upkeep. This result is robust to both changes in the neighborhood condition generated by other neighbors’ increase in maintenance and exogenous public investment in the neighborhood.