Green Online vs Green Offline preferences on local public goods trade- offs and house prices Annie Tubadji a, * , Peter Nijkamp b, c a University of Bologna, Department of Economics, Rimini, Italy b Tinbergen Institute, Amsterdam, The Netherlands c Adam Mickiewicz University Poznan, Poland article info Article history: Received 10 July 2015 Received in revised form 31 October 2016 Accepted 24 November 2016 Available online xxx JEL-classification: Z10 H41 R11 R21 Keywords: House pricing Learning model Culture Preferences Public goods Green online Green offline abstract This paper focuses on the relationship between (i) house prices and (ii) local green public goods. The main objective of the paper is to analyse a specific house-pricing mechanism which reflects the utility of being Green Offline, i.e. having access to green areas, versus the utility derived from the ability to be Green Online. The focus will be on data from European Union countries, and in particular Germany. Our results show that on an aggregate level for the EU there appears to be a clear indication for an irrational house-pricing mechanism, ignoring the negative trade-off effect from Green Online and Green Offline public investments (goods and assets). Meanwhile, on an individual level, for the case of Germany, more detailed bounded rationality effects of fashion-driven supply on house pricing are observed, positively related to Green Online values but negatively related to high Green Offline preferences. In conclusion, we find that house prices throughout Europe do not reflect a rational social change in green preferences, but tend to irrationally overprice Green Online values, which may create instability on the local housing market in the long run. © 2016 Published by Elsevier Ltd. 1. Introduction Where people prefer to live is reflected in the monetary and non-monetary (e.g. cultural) value that they attribute to their habitat. To understand this valuation mechanism, we need to design first an appropriate house-pricing model that focuses on the value of houses in cities (as opposed to rural areas), since cities are the geographical magnets for the world today. Secondly, a house- pricing model should capture a meaningful set of needs and atti- tudes towards the socio-economic activity of the city from which people derive their utility. An appropriate house-pricing model should, therefore, include both the economic and the social aspects of living in a certain place, including the opportunities offered by digital technology. Clearly, the pricing should reflect the relationship to both: (i) economic fundamentals such as: the overall productivity of the place, income, transportation/accessibility, etc.; and (ii) socially-relevant aspects such as the particular mix of cultural amenities (as claimed by, amongst others [23]), public goods (such as quality of, and access to, education; see, for example Ref. [26,67]), and common assets (such as green spaces; see, for example Ref. [37,69,55]). While cultural amenities and public goods are widely studied in recent research, the notion of green values is more included in the dia- logue on clean air and emissions (see, for example Ref. [19]) than in the context of a leisure and socialization-related public good. The original meaning of the ‘need for green’ as a social arena, a place for interaction and derivation of social communication utility (as advocated by, for example Ref. [37]), is basically absent in the modern economic analysis dealing with house-pricing models. The present paper attempts to offer an exploration in this ‘green area’ domain of utility. Moreover, we regard green values in the context * Corresponding author. E-mail addresses: atubadji@hotmail.com (A. Tubadji), p.nijkamp@vu.nl (P. Nijkamp). Contents lists available at ScienceDirect Socio-Economic Planning Sciences journal homepage: www.elsevier.com/locate/seps http://dx.doi.org/10.1016/j.seps.2016.11.001 0038-0121/© 2016 Published by Elsevier Ltd. Socio-Economic Planning Sciences xxx (2016) 1e15 Please cite this article in press as: Tubadji A, Nijkamp P, Green Online vs Green Offline preferences on local public goods trade-offs and house prices, Socio-Economic Planning Sciences (2016), http://dx.doi.org/10.1016/j.seps.2016.11.001