JEL classification: C81 C82 D12 E21 E31 E32 R29 Keywords: User costs House price appreciation Forecasting Rental equivalence a b s t r a c t Previous research [Verbrugge, Randal, 2008a. The puzzling divergence of aggregate rents and user costs, 1980-2004. The Review of Income and Wealth 54 (4), 671-699] demonstrated that housing rents and ex ante user costs diverge markedly for extended periods of time, a finding with profound implications for income and inflation measurement. But the primary data sources in that study were various indexes, based upon largely disjoint data sources, constructed using different aggregation techniques, and each subject to various criticisms. This raised doubts about the quality of the comparison. The relationship between user costs and rents might well be much tighter at the micro level; after all, house prices and rents (and their growth rates) can vary dramatically within cities, and rents are notoriously sticky. Furthermore, the use of indexes precludes both cross-sectional and dollar cost comparisons. In this study, we use Consumer Expenditure Interview Survey (CE) data to examine the relationship between user costs and rents at the individual unit-level, in dollars, using unit-level information on house value, rent, taxes, and the like. This allows us to accurately estimate unit-specific user costs and to control for unobservables like structure and neighborhood quality. We also make the point that in theory, after-tax user costs should equal net rent, i.e., expected rental income, rather than gross rent.Our findings are striking. In keeping with most previous research, we find tremendous divergence between conventional measures of user costs and net rents, thus ruling out index construction errors as a possible explanation. This divergence does not result from a faulty rent measure: we find that reported rents are sensible, in that they move similarly to official rent indexes, and are not simply out-of-pocket expenses. Instead, and most perplexing, we find a surprisingly close correspondence between net rents and a particular estimate of user costs, one implicitly assuming zero transactions costs and constructed using an appreciation measure that is both theoretically suspect and empirically a poor predictor of actual appreciation.Published by Elsevier Inc.

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The cost-effectiveness of various end-stage renal disease (ESRD) treatments was compared using two different cost measures. The first measure, gross social costs, excluded output gains due to treatment, whereas the second measure, net social costs, included output gains from both market and nonmarket activities. The cost-effectiveness criterion was the cost-per-life year gained or the implicit value of a year of life. The lower the cost-per-life year gained, the more costeffective the treatment was. Four ERSD treatments were evaluated over 20 years. Home dialysis and transplantation were more cost-effective than in-center dialysis, regardless of whether gross or net social costs were used.