Friday, April 8, 2011

The effect of soil type on rent elasticity

The railways paper is moving along. We now have 23 estates in the dataset. We have shown that rent rose with the amount of track within a 40km radius of the estate. We have also shown that the year when the railway track near the estate was connected to London was statistically highly significant. This implies that the London market was really dominant. One result which is still a bit puzzling and which we are working on is the differences in elasticity. By elasticity, we mean the percentage change in rent caused by a percentage change in amount of track. The elasticities are really quite different....Holkham Hall for example is twice that of the smallest. This is interesting! The rate of increase may show us something about the relationship between landowner and tenant.

One possible reason is the production type of the farm. We know that dairy and meat prices rose more than wheat farming during the 1832-1869 time period. Folks were getting richer and so could afford a better diet. So farms which were on soil suitable for dairying might be more profitable and so the landowner could charge a higher rent. The map shows the estates, with the green circle proportional to the elasticity. Red soil is good for dairying and light blue for wheat. The seems to be a pattern: smaller elasticities on wheat soil. BUT look at the circle I've drawn around Leconfield and Emmanuel Hospital. They seem to be on the same (red) soil but the elasticities are quite different. Leconfield is the little circle just to the left of the larger Emmanuel circle. Why? Perhaps because Emmanuel Hospital is institutionally owned. Or the owner of Leconfield wasn't a tough businessman? More work to do.

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