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The price of indoor air pollution: evidence from risk maps and the housing market

Pinchbeck, Edward W., Roth, Sefi, Szumilo, Nikodem and Vanino, Enrico ORCID: 0000-0002-4740-1501 (2023) The price of indoor air pollution: evidence from risk maps and the housing market. Journal of the Association of Environmental and Resource Economists, 10 (6). pp. 1439-1473. ISSN 2333-5955

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Identification Number: 10.1086/725028

Abstract

This study uses the housing market to examine the costs of indoor air pollution. We focus on radon, a common indoor air pollutant which is the leading cause of lung cancer after smoking. For identification, we exploit a natural experiment whereby a risk map update in England induces exogenous variation in published pollution risk levels. We find a significant negative relationship between changes in published pollution risk levels and residential property prices. Interestingly, we do not find a symmetric effect for decreasing risk. We also show that the update of the risk map led higher socioeconomic groups (SEGs) to move away from affected areas, attracting lower SEG residents via lower prices. Overall, our results demonstrate that indoor air quality has material economic effects on the housing market and provide novel policy-relevant insights into how the market responds to information on environmental risks.

Item Type: Article
Official URL: https://www.journals.uchicago.edu/toc/jaere/curren...
Additional Information: © 2023 Association of Environmental and Resource Economists.
Divisions: Geography & Environment
Subjects: G Geography. Anthropology. Recreation > GE Environmental Sciences
H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HB Economic Theory
JEL classification: Q - Agricultural and Natural Resource Economics; Environmental and Ecological Economics > Q5 - Environmental Economics > Q53 - Air Pollution; Water Pollution; Noise; Hazardous Waste; Solid Waste; Recycling
H - Public Economics > H2 - Taxation, Subsidies, and Revenue > H23 - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
R - Urban, Rural, and Regional Economics > R2 - Household Analysis > R21 - Housing Demand
Date Deposited: 17 Mar 2023 10:00
Last Modified: 19 May 2024 03:48
URI: http://eprints.lse.ac.uk/id/eprint/118450

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