Decomposing Variations in Quality of Life Through Amenities: Evidence From Korean Cities

ABSTRACT We estimate the quality of life (QOL) across Korean cities and decompose the cross‐sectional and temporal variations in QOL through amenities. Using administrative housing transaction data, a city's revealed‐preference QOL is estimated from its cost of living relative to its wage level. Seoul, the biggest city in Korea, had a significantly high QOL in 2019, and its QOL continuously increased from 2015 to 2019. Based on a hedonic framework, households are willing to pay more for denser, more educated, and warmer cities. Decomposing QOL using amenities chosen by LASSO, we find that a large portion of the cross‐sectional variation in QOL across cities is attributable to human‐made amenities. We also show that most temporal variation in QOL can be accounted for by amenities, particularly their increasing value.