It is no secret that California real estate is among the most expensive in the nation. Research has shown that California house prices are far above what would be predicted based on the costs of home construction, which is generally not the case in other regions. There are two primary explanations for the California price premium. The first focuses on the supply side, maintaining that California’s onerous restrictions on development – stringent zoning, time-consuming permitting, high developer exactions, etc. – artificially add tens or even hundreds of thousands of dollars to the price of a home. Another explanation focuses on demand. It suggests that the “California dream” is very much alive, and that the high quality of life in California – thanks to amenities like the weather, the natural setting, and leisure and cultural opportunities – is responsible for the high cost of real estate in the state. In this case, Californians are getting what they are paying for. PhD student Eric Morris has designed a project to explore the latter hypothesis. It will use data from the Gallup Healthways Well-Being Index (GHWBI) survey to test whether Californians report higher levels of life satisfaction than citizens in the rest of the nation. It will first examine basic happiness levels to see Californians are indeed more satisfied with life than others. Next, important control variables which reflect metro area, neighborhood and individual characteristics will be added to the models. If Californians report being more or less happy than others, can this be explained by things like demographic factors or amenities that are unique to the state? The results from this analysis will help determine whether Californians are truly “getting their money’s worth” in compensation for the high real estate prices they pay. If indeed Californians report higher well-being than others in the rest of the nation, it would indicate that a real estate premium is justified. If high prices are not matched with high well-being, it would suggest that either: 1) life in California is no better than in other places, but people think it is better and thus are willing to pay more due to imperfect information, or 2) regulation, not desirability, may be what is fueling the price differential.