Economic return of architecture awards: Testing homebuyers' motives for paying more

Abstract

Architecture awards can increase the value of the winning properties, especially international accolades. This architecture award premium emerges only after the win and is orthogonal to the building's intrinsic aesthetic. The identification exploits a fact: Not all of the comparable, deserving projects succeed eventually. Propensity score matching isolates unwanted selection for treatment and preserves desired randomness, allowing difference-in-differences to compare projects having a similar chance of winning. We find a 5.4% architecture award premium in Singapore's housing market. Three different tests validate the common trend assumption. By triple-differences analyses, the award premium mainly belongs to large homes. It is unresponsive to construction quality and project visibility and decreases with winning projects' supply. A positive halo effect exists. These results lend much support to conspicuous consumption, among possible homebuyers' motives.