Hedonic models are commonly used in real estate appraisal, real estate economics and Consumer Price Index (CPI) calculations. Hedonic models can accommodate non-linearity, variable interaction, and other complex valuation situations. Hedonic models are most commonly estimated using regression analysis, although some more generalized models such as sales adjustment grids are special cases which do not.Īn attribute vector, which may be a dummy or panel variable, is assigned to each characteristic or group of characteristics.

This requires that the composite good (the item being researched and valued) can be reduced to its constituent parts and that those resulting parts are in some way valued by the market. It decomposes the item being researched into its constituent characteristics, and obtains estimates of the contributory value for each. In economics, hedonic regression, also sometimes called hedonic demand theory, is a revealed preference method for estimating demand or value.

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Unsourced material may be challenged and removed.įind sources: 'Hedonic regression' – news Please help improve this article by adding citations to reliable sources. It is so then that the hedonic calculus is created to value the aspects of acts to consider how worthwhile or correct they are in terms of the amount of pleasure they bring and to whom.This article needs additional citations for verification. To put this into an example, say we were given one million pounds, If we keep it all to ourselves the pleasure would be very intense and it would have a very long duration, but if we shared it among our family we could have the pleasure affect a greater number of people. This calculus consists of 7 parts: Intensity, which is simply how intense the pleasure of an act will be, duration: how long the pleasure will last, certainty: if we can guarantee that pleasure will arise from the action, fecundity: whether or not the pleasure will continue to be pleasurable if the act is repeated, propinquity: how 'far' away the pleasure is, in terms of physical space or time, purity: how 'pure' an action can be considered to be, and extent: how many people will be affected. Created by combining hedonism, (the pursuit of pleasures and avoidance of pains) and democracy (majority rule) the hedonic calculus is used to evaluate how much pleasure or pain would be caused by an action. The Hedonic Calculus is one of the central ideas of Bentham's Act Utilitarianism.

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