Agricultural economics professor Matt Fannin is heading a team of researchers who are working to define with dollars aspects of living areas that previously did not have price tags.
Using $500,000 from the U.S. Department of Agriculture, Fannin, along with researchers Tom Johnson of the Rural Policy Research Institute at the University of Missouri and John Pender of the USDA Economic Research Service, will analyze the value people place on parts of communities like lakes, schools, rivers and other natural resources.
“There’s value people place on things that is beyond prices,’ Fannin said. “Usually when measuring wealth we may take a look at wealth based on financial wealth, their bank accounts and stock portfolios.”
The team’s grant is part of several the USDA issued in the Agriculture Food and Research Initiative to fund programs to increase prosperity in rural communities, according to a news release
Wealth, Fannin said, includes more than businesses and how many people in a community are at the poverty level. Wealth isn’t just about the size of a house, but the proximity of other resources.
He said it includes the state of the environment, social problems and issues like the quality of local school systems.
Fannin said what people place value on does not always have a dollar amount attached, but the importance placed on these items affects community members’ choices. Research shows people will pay much more for a house on a lake than a house down the street without a lakefront view, even if the two houses are the same size.
The team will create a method to give prices to unpriced parts of a community, like clean air or fewer rainstorms, and then develop a way to measure how much money and effort should be invested to maintain the items communities enjoy.
“Once we put a value on these, we can assess whether or not we are investing enough to maintain them,” Fannin said. “Our approach also attempts to recognize that people make their own decisions on these things.”
The information provided through this research is multi-functional, with applications in increasing wealth in poorer or rural communities, easing financial strife, educating researchers who want to learn more about economic development.
Fannin said the team hopes eventually to put its findings about communities into a database.
Fannin said this project of redefining wealth has practical applications for businesses as well as homeowners. Knowing what people see as important when selecting real estate is good for businesses to use in planning and development.
“One of the things important for many businesses is location,” Fannin said. “So finding out where people want to live is good.”