Endogenous Segregation Dynamics and Housing Market Interactions: An ABM Approach

Wednesday, 18 July 2018: 11:10
Oral Presentation
Benjamin BONAKDAR, Institute for Macroeconomics, Ruhr-University Bochum, Germany
In contrast to previous research, I hypothesize that residential segregation patterns do not only result from an individual’s perception of different ethnicities in a particular neighborhood, but is rather influenced by socioeconomic factors. The underlying assumption here is that the interpretation of Schelling’s statement “being close to people of your own kind” can be extended to the social status of an individual, which is part of the comparison from oneself to the society and to the respective peer group. Accordingly, agents are endowed differently with respect to income, education and skin color, which leads to the emergence of a system with a higher degree of heterogeneity. Furthermore, this theoretical model becomes more complex by introducing a housing market, in which agents have to interact, if they decide to move elsewhere.

In order to analyze these dynamics, I implement an agent-based model with several features, where the decision criterion of moving to a particular place is connected to housing affordability and individual preferences by ranking available spots, which fit into the agent’s disposable budget. One of the main features of the model is the endogenization of the tolerance threshold in the segregation dynamics. Other decisive components for the endogenous segregation system are denoted as multidimensional dissimilarity index and life-satisfaction function, which serve as determinants for the individual willingness-to-stay in the current neighborhood and subsequently for the actual moving decision. First results indicate that agents cluster themselves rather according to house prices and income levels than to skin color. These results imply that individual tolerance is not only dependent on different ethnicities in one neighborhood, but rather on the socioeconomic status of an individual.