The importance of standards

As I’ve argued on this blog before, standards are an important public good – and in the age of information, an increasingly important public good. Here’s some good evidence of the value of high quality standards.

The nascent market for “green” real estate in Beijing, by Siqi Zheng, Jing Wua, Matthew E. Kahnb, Yongheng Deng,
In recent years, formal certification programs for rating and evaluating the sustainability and energy efficiency of buildings have proliferated around the world. Developers recognize that such “green labels” differentiate products and allow them to charge a price premium. China has not formally adopted such rating standards. In the absence of such standards, developers are competing with each other based on their own self-reported indicators of their buildings’ “greenness”. We create an index using Google search to rank housing complexes in Beijing with respect to their “marketing greenness” and document that these “green” units sell for a price premium at the presale stage but they subsequently resell or rent for a price discount. An introduction of a standardized official certification program would help “green” demanders to acquire units that they desire and would accelerate the advance of China’s nascent green real estate market.

This entry was posted in Economics and public policy. Bookmark the permalink.
Notify of
Newest Most Voted
Inline Feedbacks
View all comments
Jim Belshaw
8 years ago

The only difficulty, Nicholas, is that the setting of standards has nothing of itself to so with high standards. Indeed, standards based approaches can actually work against high standards.

Jim Belshaw
8 years ago

Nicholas, there is a huge problem with the word standards. In the traditional standards environment, standards simple means fitness for purpose. It has nothing of itself to to with relative levels. Herein lies the problem. If we conflate the word standards with an implicit concept of high we get contused.

Jim Belshaw
8 years ago

Thanks, Nicholas. We were indeed. You put that distinction very nicely. But it also illustrates the problem we have with the use of the word standards. It’s often used as a universal, but the variety in meaning means that it has to be put in the context applying at the time. I have a particular concern with with what I perceive to be the misuse of the term in public policy. However, that does not detract from your point.